Economics: Concentration Ratios?

[Lizzie01]

How are concentration ratios calculated? For example: If the auto industry sell 1000 autos a year: GM sells 400, Ford 300, Chevy 250. What is the four-firm concentration ratio of the auto industry?

ps I know the 4th firm is not specified but I assume it sells the remaining 50...
I'm not looking for an answer to the problem just a demonstration on how to find the concentration ratio.
there are only 3 firms specified and i thought that concentration ratios were only for four or eight firms in one industry... so do you think is a trick question?

[agent177]

The N-firm concentration ratio is the market share of the N largest firms in the industry. In your example GM, Ford and Chevy sell 950 cars between them - this is 95% of sales in the auto industry and so the three-firm concentration ratio is 95%.

If the 4th firm sells the rest as you say, then the four-firm concentration ratio is 100% i.e. there are only four firms in this market.

Clearly a lower concentration ratio is a sign of a more competitive market (in your example three firms make up 95% of the market - not very competitive!)

Hope that's clear.

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If only three firms are specified then I would assume that they are looking for the three-firm concentration ratio, therefore I'd give the answer 95%.