Problem 07-16 (algo) Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl-Hirschman index of 3,10O. Case's share of that market was 20 percent, while Fiat comprised just 14 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase? Based only on this information, is the Justice Department likely to challenge the merger according to the Horizontal Merger Guidelines? O No O Yes O Possibly - but other factors will be considered

Problem 07-16 (algo) Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl-Hirschman index of 3,10O. Case's share of that market was 20 percent, while Fiat comprised just 14 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase? Based only on this information, is the Justice Department likely to challenge the merger according to the Horizontal Merger Guidelines? O No O Yes O Possibly - but other factors will be considered

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 2.3CE

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(a) Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl- Hirschman index of 2,765. Case's share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase?
16-3 House Closing You’ve entered into a contract to purchase a new house, and the closing is scheduled for the next week. It’s typical for some last-minute bargaining to occur at the closing table, where sellers often try to tack on extra fees. You have three options for the closing: (1) attend yourself, (2) send an attorney authorized to close only per the previously negotiated terms, or (3) presign all the closing documents per the current terms and not attend the closing. Which of b. c. In Egypt, you calculate that the annual value created by one distributor is $60 million per year, but would be $80 million if two distributors carried your product line. How much of the value can you expect to capture? Argentina also has two distributors with values similar to those in Egypt, but both are run by the government. How does this affect the amount you could capture? In Argentina, if you do not reach an agreement with the government distributors, you can set up a less efficient…
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1. Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $160,000. Variable processing costs are estimated to be $6 per book. The publisher plans to sell single-user access to the book for $46. a. Build a spreadsheet model to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3,500 copies?b. Use a data table to vary demand from 1,000 to 6,000 in increments of 200 to assess the sensitivity of profit to demand.c. Use Goal Seek to determine the access price per copy that the publisher must charge to break even with a demand of 3,500 copies. d. Consider the following scenarios: Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Variable Cost/Book $6 $8 $12 $10 $11 Access Price $46 $50 $40 $50 $60 Demand 2,500 1,000 6,000 5,000 2,000 For each of these scenarios,…
Problem 07-04 (algo) A firm has $1,700,000 in sales, a Lerner index of 0.56, and a marginal cost of $50, and competes against 800 other firms in its relevant market. Instruction: Enter your responses rounded to two decimal places. a. What price does this firm charge its customers? b. By what factor does this firm mark up its price over marginal cost? %24
Problem 10-49U Overall: ( /10) On the graph paper included on the following page, draw a graph that contrasts monopoly and perfect competition in terms of profit-maximizing price and output. Only a single graph should be drawn here with both concepts graphed together on the same graph.
Suppose two firms, Genera Pharma and Futura Pharma, are the only two producers of a specific drug. Genera and Futura have the same formula and sell the drug for the same price, but they are considering whether or not to spend money on an advertising campaign. Each firm can either buy the advertising campaign or not buy it and the following table shows profits for four different scenarios. Futura AD No AD AD (4,4) (12,0) Genera No AD (0,12) (8,8) 1. What is the scenario that maximizes the sum of profits of the two companies? 2. Is there a dominant strategy for each firm? 3. What is the pure strategy Nash Equilibrium? Find 4. Denote the probability of choosing AD for Futura as f and for Genera as 9. the best response function for Futura, bƒ (g), and Genera, bg (ƒ).
4. With an estimated market share of 60%, Atlas is the dominant company and the price leader inan oligopolistic steel industry. The remaining market share is distributed equally between tencompanies. Suppose that one of those ten companies, Norton, attempts to gain market share byundercutting the price set by Atlas.Calculate the “Four Firm Ratio” and Herfindahl-Hirschman Index “HHI” in the above-describedmarket and interpret your answer. What model can best resemble this market? Briefly explainthis model. In your opinion, what will be the effect of Norton’s attempt described above onAtlas’s market share: will it increase, decrease, or not affected at all? Justify your answer.
With millions of passengers selecting air travel to reach their intended destinations, CaribbeanInternational Airlines has cornered the market by providing competitive fares, consistent customerservice and excellent returns for investors. The Chief Executive Officer has stated that thecompany wants to ensure that Caribbean nationals in the diaspora have easy and affordable accessto an airline with exceptional customer service. This airline caters to middle to high income earnerswho like to travel for adventure or relaxation. Priding itself as an affordable carrier with bargainfares, its mission is “Making air travel hassle free, reliable, economical and comfortable, we striveto transport our passengers safely to their chosen destinations.” The company has employees frommainly the Caribbean and North America who understand the needs and demands of their clientele.The company intends to expand travel services from various Caribbean destinations and Miami toother locations like New York,…
Below is a data of the per-unit costs incurred by a competitor in selling face mask per pack (5 masks per pack) per day. AFC (P) AVC (P) Output (in packs) 0 1 2 3 4 5 6 7 8 9 10 60.00 30.00 20.00 15.00 12.00 10.00 8.57 7.50 6.67 6.00 45.00 42.50 40.00 37.50 37.00 37.50 38.57 40.63 43.33 46.50 ATC (P) 105.00 72.50 60.00 52.50 49.00 47.50 47.14 48.13 50.00 52.50 MC (P) 45.00 40.00 35.00 30.00 35.00 40.00 45.00 55.00 65.00 75.00 A. Assuming that the product's price is P58 per pack, should the competitor sell in the short-run? Why or why not? If it decides to sell, what will be the profit-maximizing (or loss-minimizing output per day)? What is the profit (or loss) that the seller can realize per day? What is the profit (or loss) per pack? B. Assuming that the product price is P42 per pack, answer the same questions in letter A. C. Because of increasing sellers of masks in the market, the product's price further decreased to P32 per pack. Again, answer the same questions in letter A. D.…