Cencentration Ratio- Suppose you have an industry with 20 firms and the cr is 20% how would you describes this industry

The concentration ratio is usually thought of as the percent of an industry (i.e., market share) made up of the top 4 (sometimes 5) firms in the industry. If 4/20 = 20% of the firms make up 20% of the industry, then the all firms in the industry must be very close in size and the industry is likely to be highly competitive.

To describe the industry based on the concentration ratio (CR) of 20% and 20 firms, we need to understand what the concentration ratio represents. The concentration ratio measures the total market share of a certain number of firms in an industry. In this case, the concentration ratio of 20% indicates that the top 20 firms in the industry hold 20% of the market share.

Therefore, if we have an industry with 20 firms and the CR is 20%, we can say that the industry is relatively unconcentrated. This means that the market share is dispersed among a larger number of firms, and there is no dominant firm or a small group of firms controlling a significant portion of the market.

In simpler terms, there is a diverse competitive landscape in the industry, with a relatively equal distribution of market power among the 20 firms. It suggests that consumers have a wide range of options to choose from, and no single firm holds a significant advantage over others in terms of market share.