Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 12P
To determine
(a)
To compute:
The HHI for the industry with the given percent of market shares.
To determine
(b)
To compute:
The HHI for the industry with the given percent of market merge.
To determine
(c)
To compute:
The HHI for the industry with the given percent of market merge.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
(Mergers and Public Policy) Calculate the Herfindahl-Hirschman Index (HHI) for each of the following industries.Which industry is the most concentrated?a. An industry with five firms that have the followingmarketshares: 50 percent, 30 percent, 10 percent,5 percent, and 5 percentb. An industry with five firms that have the followingmarketshares: 60 percent, 20 percent, 10 percent,5 percent, and 5 percentc. An industry with five firms, each of which hasa 20 percent market share
Only typed answer
In a duopoly, each firm has marginal cost MC = 100, and market demand is Q = 500 - 0.5p.
Assuming average cost is the same as marginal cost.
In which oligopoly, Cournot or Stackelberg, do firms have more market power?
a. Cournot since the Lerner Index in the Cournot model is twice as much as that in the Stackelberg model.
b. Stackelberg since the Lerner Index in the Cournot model is twice as much as that in the Stackelberg model.
c. Cournot since the Lerner Index in the Cournot model is about 1.08 times as much as that in the Stackelberg model.
d. Stackelberg since the Lerner Index in the Cournot model is about 1.08 times as much as that in the Stackelberg model.
Some politicians (and others) have suggested that the largest U.S. tech firms have monopolies and need to be broken up.
Comment on what such breakup(s) would do to the industry that these firms are competing in. For example, the intensity of rivalry would increase, but what else would happen to the industry?
How could breaking up their industry be good for industry incumbents, i.e., those companies in the industry that’s being broken up?
Knowledge Booster
Similar questions
- if two firms (firm A and firm B) are competing selling T-shirts, both at $12 per shirt, both have a quantity of 50 and both can produce a t-shirt at a cost of $2 per shirt both marginal and average. If both companies are competing directly against each other in prices, what will the new marginal price of company B will be? and what will be their profits? Also, how do you solve the equilibrium price in oligopolies?arrow_forward1. There are 10 firms in an industry, and each firm has a market share of 10 percent. The industry’s Herfindahl index is a. 10. b. 100. c. 1,000. d. 10,000. 2. In the small town of Geneva, there are five firms that make watches. The firms’ respective output levels are 30 watches per year, 20 watches per year, 20 watches per year, 20 watches per year, and 10 watches per year. The four-firm concentration ratio for the town’s watch-making industry is: a. 5. c. 90. b. 70. d. 100. 3. Which of the following best describes the efficiency of monopolistically competitive firms? a. Allocatively efficient but productively inefficient. b. Allocatively inefficient but productively efficient. c. Both allocatively efficient and productively efficient. d. Neither allocatively efficient nor productively efficient.arrow_forwardQuestion 6 (a) Why is Perfect Competition considered to display high level of economic efficiency? (b) How does monopoly result in a dead-weight loss? Illustrate with diagram. (a) How is oligopoly different from monopolistic competition? (b) Illustrate and explain how the oligopolistic firms determines their collective profit by maximizing price and output levels when they collude and act like a cartel (monopoly). Question 7 (a) What are the main causes of market failure? Give one example and illustrate using a diagram. (b) Explain the difference between private costs and social costs. (c) Government of Country X is considering implementing a tax on fizzy drinks. Using a demand and supply diagram, illustrate what effect the tax will have on the market of fizzy drinks. (d) For what purposes does government use taxes-both at micro and macroeconomic level?arrow_forward
- Two firms facing a demand curve are P = 50 -5Qwhere Q = Q1 + Q2. The cost functions of the two firms are:C1(Q1) = 20 + 10Q1C2(C2) = 10 + 12Q2Based on this information:a. Suppose both companies have entered the industry, then what is the price?and the profit-maximizing amount for the two firms under conditionsperfectly competitive market?b. What is the quantity, price and profit of the two firms ifcompanies collude in pricing?c. What are the quantities, prices, and profits of the two firms if theydo the Cournot strategy, and draw the reaction curves of the twothe company?d. What are the quantity, price, and profit of the two firms if theycarry out the stakeberg strategy.arrow_forwardCarrot Computers and its competitors purchase touch screens for their tablet computers from several suppliers. The six makers of touch screens have market shares of, respectively, 19 percent, 18 percent, 14 percent, 16 percent, 20 percent, and 13 percent. a. What is the Herfindahl index for the touch screen manufacturing industry? b. By how much would a proposed merger between the two smallest touch screen makers increase the Herfindahl index? Would the government be likely to challenge that proposed merger? c. If Carrot Computers horizontally merges with its competitor Blueberry Handhelds, by how much would the Herfindahl index change for the touch screen industry?arrow_forwardIn relation to degree of concentration, CR4<40%? a. tight oligopoly b. effective competitive c. effective monopoly d. loose oligopolyarrow_forward
- Q1: What is the, HHI, Herfindahl-Hirschman Index for an industry where six companies each have a market share of 15% and one company which has a market share of 10%? Q2:About fifty years ago, the EPA, Environmental Protection Agency, embraced command and control laws. Later on, the EPA made adjustments and updates. These laws and their adjustments, a/ draws distinctions between the needs of firms and costly equipment upgrades. b/ are given considerable credit for cleaner air and water in recent decades. c/ were an inexpensive incentive for industrial polluters to improve performance. d/ were necessary as US industries had zero incentive to control pollution.arrow_forwardUnsure which is the correct answers Suppose that three firms make up the entire wig manufacturing industry. One has a 50% market share, and the other two have a 25% market share each. The Herfindahl index of this industry is a. 3,750 b. 1,000 c. 10,000 d. 5,000 e. 2,500 Mane Attraction, one of the firms with a 25% market share in the wig manufacturing industry, leaves the market. This would cause the Herfindahl index for the industry to __-- a. remain the same b. fall c. rise The largest possible value of the Herfindahl index is 10,000 because: a. an index of 10,000 corresponds to 100 firms with a 1% market share each b. an index of 10,000 corresponds to a monopoly firm with 100% market share c. an industry with an index higher than 10,000 is automatically regulated by the Justice Departmentarrow_forwardExplain whether or not each industry fits the definition of an oligopoly. What are the dominant firms ineach industry?(a) Video game consoles(b) Video streaming services(c) Internet search engines(d) Beer(e) Cornarrow_forward
- 3) Why would firms advertise? Give some examples of a market structure where firms need to advertise to gain a fair advantage over their rivals and also identify the type of market structure? Give typing answer with explanation and conclusionarrow_forwardIn a market there are five firms, all have a total cost curve equal to CT = 2q. The market demand is Q = 500 - 5P. How much profit would each firm get if they collude and share the market equitably? What is the profit to each firm if they agree to collude, but one firm misleads the others charging a slightly lower price? What is the profit if all firms do not collude and compete via price?arrow_forwardSuppose that the six firms in industry A have annual sales of 40, 35, 12, 5, 5, and 3 percent of total industry sales. For the six firms in industry B, the figures are 35, 18, 15, 14, 10, and 8 percent. b. Calculate the four-firm concentration ratio and the Herfindahl index for each industry and compare their likely competitiveness. Instructions: Enter your answers as whole numbers. Industry A four-firm concentration ratio = Industry A Herfindahl index = Industry B four-firm concentration ratio = Industry B Herfindahl index = c. Industry A will be ________ (more/less) competitive than industry B. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc