Finance
- What do more digits in the NAICS code imply (as compared to a lower number of digits)? Is there a general trend in terms of the concentration ratios as you move to “more digits”? Why?
NICS are 2- through 6- digits hierarchical classifications systems which are offering five levels of detail. Each digit in the code is a part of series of progressively narrower categories. When there are more digits in a code there is a greater classification. There is a general trend as for all the 4- largest company they have a concentrations code of 856, 857 for the 8-largest company, 858 for the 20-largest companies, 859 for the 50-largest companies.
- Which sector or industry is the most concentrated for each of the 4, 8, 20, and 50-firm concentration ratios?
Starch and vegetable fats and oils manufacturing is the most concentrated as it has a total of 189 companies.
- Which sector or industry is the most concentrated as indicated by its 50-firm HHI?
The malt manufacturing company since it has a concentration of 859 and there is a total of 189 companies.
4.How would you categorize the industry structure for the most concentrated industry provided in your answers to Parts 2 and 3 above?
Industries are categorized on the base of their degree and nature of competitions of its products. The industries can be categorized as monopolist’s competitions as all the firms are competing against each other by similar products but they are highly differentiated. The lower production cost the higher optimal output in pure competitions industry structures.
5.For the remainder of the assignment drop all NAICS sectors/industries that are less than six digits
- Breakfast cereal manufacturing.
- Starch and vegetable fats and oils manufacturing
- Flour milling and malt manufacturing
- Grain and oilseed milling
- Create a scatter chart that shows each industry’s 50-firm concentration ratio on the horizontal axis and the HHI on the vertical axis. How would you expect the scatter to turn out? Does your prediction empirically hold? yes as it have a straight line which shows good increasing trend in revenue.
- Calculate the correlation between the 50-firm concentration ratio and the HHI. Explain this correlation.
- Correlations ratio =total concentrations /number of firms
CR=859+859+859+859+859+859+859
= 6013/6
=1002.17
- HHI =Total percentage /number of companies or units
100+95+100+97.1+100+99.7+99.1+100++100=891.4
=891.4/10
89.14%
- Create a histogram using the concentration ratios for each 6-digit industry. Explain this histogram
There is a high for the 50-companies in all the sectors as they have a concentration of 859 which means have high outcome as the rice malt and flour has the highest number of companies which leads to higher competitions which lead to low revenue.
- Please submit the following two items via Blue Linessss: a. A 2-3 page Word (.docx) or Acrobat (.pdf) document with graphs, numbers, and written discussion b. Excel (or other) data file that shows your respective calculations.
