BAHIR DAR UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS
Assignment 1for Industrial Economics (max of 10%)
Chapter coverage: chapter one and two
Instruction:
 Any form of cheating or attempt to cheat will be severely punishable
 Creative ideas will be awarded.
1. Discuss the similarity and difference between Industrial Economics and
Microeconomics ( 2.5 marks )
2. What are the two elements of Industrial economics? Discuss in detail. ( 2.5
marks)
3. What factors determine market concentration? ( 2 marks)
4. Consider the following hypothetical sales volume distribution of two
industries: Textile and Leather manufacturing. Both industries are composed
of 10 firms. The table presents the total number of firms in each industry and
the firm’s sales volume, in a particular time period.

Industry Firm Firm Firm Firm Firm Firm Firm Firm Firm Firm
1 2 3 4 5 6 7 8 9 10

Textile 190 180 180 220 200 220 210 195 195 210

Leather 180 20 35 50 250 10 20 25 220 190

Calculate:
A) Market concentration using concentration ratio (take M=4) and Hirschman-
Herfindahl index for both industries and interpret the results. (1 mark)
B) Compare the results across industries and identify which industry is more
concentrated. (1 mark)
C) Compare and contrast the two indexes as a measure of market concentration.
( 1 mark)