Microeconomics (7th Edition)
Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 15, Problem 15.5.4PA

Subpart (a):

To determine

Effect of merger.

Subpart (b):

To determine

Effect of merger.

Subpart (c):

To determine

Effect of merger.

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What is the difference between a vertical merger and a horizontal merger? Give an example of each category.
5.4 Food service firms buy meat, vegetables, and other foods and resell them to restaurants, schools, and hospitals. US Foods and Sysco are by far the largest firms in the indus- try. In 2015, these firms were attempting to combine or merge to form a single firm. A news story quoted one res- taurant owner as saying: "There was definite panic in the restaurant industry... when the merger was announced. They know they're going to get squeezed." a. Analyze the effect on the food service market of US Foods and Sysco combining. Draw a graph to illustrate your answer. For simplicity, assume that the market was perfectly competitive before the firms combined and would be a monopoly afterward. Be sure your graph shows changes in the equilibrium price, the equilibrium quantity, consumer surplus, producer surplus, and deadweight loss. b. Why would restaurant owners believe they would be "squeezed" by this development?
Use the following table to calculate the Herfindal-Hirshman Index for the U.S. auto market. Would the FTC approve a merger between Gm and Ford?   Explain your response.                                                                                                     The table is.........                                                                                                                          GM     19%                                                                                                                       Ford     17%                                                                                                                     Toyota       14%                                                                                                              Chrysler      11%
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