Chapter 14, Problem 8DQ

Assume there are six companies in a certain industry. Four companies have $10 sales apiece, while two companies have $5 sales each. What is the industry's four-firm concentration ratio?

How do we measure a four-firm concentration ratio? What does a high measure mean about the extent of competition?

Suppose an industry is composed of six firms. Four firms have sales of $10 each, and two firms haves sales of $5 each. What is the four-firm concentration ratio for this industry? calculate HHI for this industry?

Based on United States Census Bureau data for 2017, for the utilities (electricity and gas) industry the four firm concentration ratio (C4) is 16.2 percent and the Herfindahl-Hirschman index is 161.4. Why might the actual concentration, and therefore market power enjoyed by a specific utility company in a state, be greater than what is indicated by these numbers? These ratios are calculated for the entire country, and not for a specific city or state. Please give an explanation.

Antitrust laws Cooperation among oligopolies runs counter to the public interest because it leads to underproduction and high prices. In an effort to bring resource allocation closer to the social optimum, public officials attempt to force oligopolies to compete instead of cooperating. Consider the following scenario:   Suppose that the presidents of two auto manufacturing companies exchange text messages in which they discuss jointly raising prices on their new lines of hybrid SUVs.   This illegal communication would violate which of the following laws? The Clayton Act of 1914   The Celler–Kefauver Act of 1950   The Sherman Antitrust Act of 1890   The Robinson–Patman Act of 1936

Refer to Diagram 2 above, which represents a monopolist firm, to answer the following questions. product = marginal product x selling price per unit).   What quantity will this firm produce and what price will it charge?   Suppose this monopolist firm becomes regulated and the regulatory agency wants to achieve economic efficiency. What price would the agency require the monopoly to charge and what quantity will the firm produce as a result?   If the monopolist charges a price that will achieve economic efficiency, will the monopolist be making a profit or loss? Explain your answer with a calculation.     Now suppose the government regulates the monopoly by imposing a price ceiling of $60. How many units will be produced? Will every customer who is willing to pay the ceiling price of $60 be able to buy the product? Explain why or why not.   Based on the price ceiling of $60, what will be the profit of this monopolist?

Suppose that a small town has six burger shops whose respective shares of the local market are (as percentages of all hamburgers sold): 26%, 20%, 18%, 14%, 12%, 10%, What is the four-firm concentration ratio of the hamburger industry and what is the Hirchmann Herfindahl Index (HHI) for the hamburger industry in this town?

Consider two industries, each comprising ten firms. In industry A, the largest firm has a market share of 49 percent. The next three firms have market shares of 7 percent each, and the remaining six firms have equal shares of 5 percent each. In industry B, the top four firms share the bulk of the market with 19 percent apiece. The next largest firm accounts for 14 percent, and the smallest five firms equally split the remaining 10 percent of the industry. a. Compute the four-firm concentration ratio and HI for each industry. Compare these measures across the two industries. Which industry do you think truly exhibits a more competitive structure? Which measure do you think gives a better indication of this? Explain. b. Now let the three second largest firms in industry A merge their operations while holding onto their combined 21 percent market share. Recalculate the HI for industry A. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care…

Suppose you are given the following firms and their annual sales data from last year in the cellular phone industry: Firm Sales (millions of dollars) Orange Is Better Than Apple S2, 000 Macro Hard S 1,300 Professors Can't See You Use Our Phones In Class $500 Phones "r" Us $800 Handhelds $1,000 Rings Up $300 We Sell You Cells $1,500 All other cellular phone companies combined sales $10, 700 Calculate the four-firm concentration ratio for this industry (show your work). Assuming that 40 percent is the dividing line between concentrated and competitive for this industry, how would you describe it?