Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 13, Problem 1RQ
To determine
Herfindahl index of 10 firms.
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If market share for six cleaning service companies are 8%, 10%, 6%, 3%, 25%, and 48%, what would
be the Herfindahl-Herschman (HHI) index calculation?
O 52
O 5008
O 523
O 3138
Suppose there are two firms in an industry and the inverse demand function for the industry is:
P = 45 - 20
Assume that the MC functions for the two firms are:
MC1 = 15
MC2 = 12
What is the price under Courbet model?
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The table below shows market share data for different firms producing desks.
Market Share in %
15
18
7
11
6
10
4
5
5
16
Firm
Aardvark Inc
Baluga, LLC
Cran Inc
Delta Co
Echo Co
Farriss Co
Gum Drop Inc
Hill Corp
Indigo Corp
Jackson Co
What is the Herfindahl Hirschman Index (HHI) for this market?
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HHI
225
324
49
121
36
100
16
25
25
256
Suppose that Delta Co and Gum Drop Inc are considering a merger. What will the HHI be after this merger?
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- Consider an oligopolistic market with 5 identical firms that choose their profit-maximizing quantities simultaneously. Suppose each firm has constant marginal costs of $123 per unit and the market elasticity of demand is - 1.08. What is the change in the prevailing market price if one additional firm joins the market? Assume that the potential entrant is identical to the incumbent firms. O A. -7.71 O B. - 5.51 O C. -9.92 O D. - 6.89arrow_forwardWhile there is a degree of differentiation between major grocery chains like Albertsons and Kroger, theregular offering of sale prices by both firms for many of their products provides evidence that these firmsengage in price competition. For markets where Albertsons and Kroger are the dominant grocers, thissuggests that these two stores simultaneously announce one of two prices for a given product: a regularprice or a sale price. Suppose that when one firm announces the sale price and the other announces theregular price for a particular product, the firm announcing the sale price attracts 1000 extra customers toearn a profit of $5000, compared to the $3000 earned by the firm announcing the regular price. Whenboth firms announced the sale price, the two firms split the market equally (each getting an extra 500customers) to earn profits of $2000 each. When both firms announced the regular price, each companyattracts only its 1500 loyal customers and the firms each earned $4500 in…arrow_forwardMarket Share of Firms in Industry 2 30 10 25 10 10 20 The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. A merger between Firm 2 and Firm 3 in Alpha would be a Industry Alpha Beta Kappa Delta 1 30 80 25 20 Select one: O a. conglomerate merger. O b. diagonal merger. O c. vertical merger. O d. horizontal merger. 32532 20 20 4 20 3 25 20 5 1 6 1arrow_forward
- bok ences Suppose Toyota and Honda must decide whether to make a new breed of side-impact airbags standard equipment on all models. Side-impact airbags raise the price of each automobile by $1,000. If both firms make side-impact airbags standard equipment, each company will earn profits of $1.6 billion. If neither company adopts the side-impact airbag technology, each company will earn $0.6 billion. If one company adopts the technology as standard equipment and the other does not, the adopting company will earn a profit of $2.5 billion and the other company will earn $-0.8 billion. If you were a decision maker at Honda, would you make side-impact airbags standard equipment? SO No O There is not enough information to answer the question. O Yes 4 If Toyota and Honda were able to cooperate, would you expect this same outcome? O No O There is not enough information to answer the question. O Yesarrow_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_forwardRawlding is a manufacturer in the oligopolistically competitive market for footballs. Two other manufacturers, Spaldon and Wilke, compete with Rawlding for football consumers. Rawlding faces the demand curve for footballs depicted on the graph. Initially, Rawlding charges $30 per football, producing and selling 7 million footballs per year. PRICE (Dollars per ball) 36 35 34 33 32 31 30 29 28 27 26 O 7 8 FOOTBALLS (Millions of balls) 9 10 G As an oligopolist, Rawlding is a price maker. If Rawlding raises the price of its football from $30 to $32 per ball, the quantity of Rawlding footballs demanded by million footballs per year. If Rawlding reduces the price of its football from $30 to $28 per ball, the quantity of by million footballs per year. (Hint: Click on the points on the graph to see their coordinates.) footballs demanded If Rawlding raises the price of its football above $30, the kinked demand curve model suggests that Spaldon and Wilke will respond by The portion of Rawlding's…arrow_forward
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