Question

An industry consists of five firms with annual sales of $1.2 million, $250,000, $100,000, $75,000, and...

An industry consists of five firms with annual sales of $1.2 million, $250,000, $100,000, $75,000, and $50,000.

a. Calculate the Herfindahl-Hirschman Index for this industry.

b. Calculate the 4-firm concentration ratio for this industry.

c. Would the U.S. Justice Department approve a merger between the two largest firms in this industry?

d. Would the U. S. Justice Department approve a merger between the third and fourth largest firms?

The inverse demand equation for the product sold by a monopolist is P(Q)=6?Q The monopolist’s total cost equation is TC(Q)=5+0.5Q^2

a. Calculate the Lerner Index.

b. Calculate price elasticity of demand.

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