1. (5 points) In January 2007, XM enjoyed about 58 percent of satellite radio subscribers, andSirius had the remaining 42 percent. Both firms were suffering losses, despite their dominance inthe satellite radio market. In 2008, the Department of Justice decided not to challenge a merger,and these two firms united to become Sirius XM.(a) What is the 4-firm concentration ratio before the merger for the satellite radio industry?Please show your calculations(b) What is the Herfindahl-Hirschman index before the merger for the satellite radio industry?Please show your calculations.(c) What is the 4-firm concentration ratio after the merger for the satellite radio industry? Pleaseshow your calculations(d) What is the Herfindahl-Hirschman index after the merger for the satellite radio industry?Please show your calculations.(e) Explain why, even with your answers to (c) and (d), the government still approved themerger.

Step 1:(a) 4-Firm Concentration Ratio before the mergerThe 4-firm concentration ratio (CR4) is the…

Answered: 1. (5 points) In January 2007, XM…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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8. Suppose there are two firms in the market. The market demand is Q=100-p and the marginal cost of production is constant at 40. What is the outcome of price and quantity and the total welfare if those two firms compete like perfect competition? What is the outcome of price and quantity and the total welfare when those two firms merge into a monopoly? What are the pre-merger HHI, post-merger HHI and change in HHI? How does the Horizontal Merger Guideline 2010 classify this proposed merger?
Economics: Industrial Economics Question: A duopoly exists in the market for lumber in a town. It costs the first company, Big Cutters, $16 per cord of wood while it costs the second company, Pine Stackers, $10 per cord of wood. The local market demand curve for wood is Q-31,000-100P. Assume each has the capacity to serve the entire market and that they can only price in whole dollar amounts (i.e.$30, not $29.99). Assume initially that Cutters and Stackers decide to collude and split the market. How many cords of wood will they sell? Choices: A. 12,000 B. 9,000 C. 15,000 D. 20,000 2. What will be the price they charge? Choices: A. 190 B. 210 C. 110 D. 160 3. How much will Big Cutters produce? Choices: A. 9,000 B. 4,500 C. 0 D. 15,000 Now assume that collusion is not possible. 4. What is the Nash Equilibrium quantity that Pine Stackers Choices: A. 0 B. 15,300 C. 14,700 D. 29,500 5. What is the Nash Equilibrium price? Choices: A. 15 B. 112 C. 11 D. 157 Thank you for your…
Firms compete in different types of market structures. In the real world, most markets are either monopolistically competitive or oligopolistic, and a few markets have a monopoly. Note that perfect competition is rare because no market has all the characteristics of a perfectly competitive market as described by the theory of perfect competition. 1. (a) What is a monopoly? Give an example. (b) How many firms are there in the Internet provider market? Is it easy or difficult for new firms to set up and compete in this industry? Explain. (c) How do firms in the Internet provider market compete?
oligopoli 5.1 The following table represents the market share percent- age for each firm in a hypothetical industry. Firm Market Share A 15 C D E 20 B 6 12 7 H 19 11 F G 10 a. Calculate the four-firm concentration ratio for this industry. b. Calculate the Herfindahl-Hirschman Index (HHI) for this industry. c. Would the Justice Department consider this industry as unconcentrated, moderately concentrated, or concen- trated? Why?
QUESTION 7 Suppose two firms (X and Y) want to merge together. X currently controls 50.59% of the market, and Y currently controls 35.96% of the market. If X and Y merge, by how many points will the HHI increase? with X and Y separate) Hint this is the value of (HHI with X and Y merged) - (HHI Round your answers to two (2) decimal places if necessary
4) Which of the following companies is least likely to operate in an oligopoly? Burger King, which sells fast food Frontier, which provides Internet services AHF pharmacy Verizon, which provides cell phone coverage
1.) Suppose you have a 10 identical firm Cournot Oligopoly. You don't have a demand equation but you do know that the market elasticity of demand is equal to -0.5 and MC = $4. What is market price? $4.00. none of the available options. $10.00 $5.00. 2.) Refer to the previous question. Suppose 2 firms leave the market. What is the new price? $5.33. $8.00. $4.00. none of the available options.
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3. Firm A and Firm B are two firms in an industry. Firm A and Firm B are planning to merge. (a) Firm A and Firm B are Bertrand duopolists with identical and constant marginal costs. Post-merger marginal cost is lower than pre-merger. Use a figure that includes a downward-sloping linear market demand to show how the merger of Firm A and Firm B will lead to anticompetitive losses as well as cost-savings. (b) Firm A and Firm B are Cournot duopolists with identical marginal costs. Post- merger marginal cost is the same as pre-merger. Use a figure that includes a downward-sloping linear market demand to show how the merger of Firm A and Firm B will lead to anticompetitive losses. (c) Firm A and Firm B are Stackelberg competitors with identical marginal costs. Post-merger marginal cost is the same as pre-merger. Firm A is the Stackelberg leader. Use a figure that includes a downward-sloping linear market demand to show how the merger of Firm A and Firm B will lead to anticompetitive losses.…
(REAL-WORLD APPLICATION) You are NOT required to read the oligopoly chapter in the textbook, but you already know quite a lot about it from our discussion of strategic interactions using game theory in weeks 2-3. This market structure is between monopoly and monopolistic competition, with only a handful of firms having a high degree of market power. Let's refresh your memory with the following example. Assume that the Australian low-cost airline industry consists of two firms and their situation can be represented by the following payoff matrix. Tigar Air Nothing Low Price More Advertising 0, 16 6, 6 Nothing 10, 10 2, 14 Jetstar Low Price 16, 0 12, 4 More Advertising 14, 2 4, 12 8, 8 a. Before solving the game, put yourself in the position of Jetstar and write down your action. Then independent of that, put yourself in the position of Tiger Air and write down your action. b. State all the dominated strategies in the full game, by which strategy they are dominated, and whether weakly or…
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