D7) Problem II.Nationwide Bank has approached Hometown Bank with a proposal to merge. The following table lists thesales of the banks in the area.Sales (in millions of US dollars)Bank NameUrban Bank540Mega Bank1,500Hometown Bank660Bulk Bank1,2651,245Nationwide BankMetropolitan BankCity Bank8801,350American Bank710Atlantic Savings1,1851. Based on the information on the table above, calculate the four-firm concentration ratio and theHerfindahl-Hirschman index in the current market.2. Basod on the FTC and DOJ Horizontal Merger Guldelines described in the text, do you think theJustice Department is likely to challenge the proposed merger? Explain your answer!

The Herfindahl-Hirschman Index (HHI) can be calculated by adding the sum of the square of the market…

1. Based on the information on the table above, calculate the four-firm concentration ratio and the Herfindahl-Hirschman index in the current market. 2. Based on the FTC and DOJ Hortzontal Merger Guldelines described in the text, do you think the Justice Department is likely to challenge the proposed merger? Explain your answer!

1. Based on the information on the table above, calculate the four-firm concentration ratio and the Herfindahl-Hirschman index in the current market. 2. Based on the FTC and DOJ Hortzontal Merger Guldelines described in the text, do you think the Justice Department is likely to challenge the proposed merger? Explain your answer!

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

D7)

Problem II.
Nationwide Bank has approached Hometown Bank with a proposal to merge. The following table lists the
sales of the banks in the area.
Sales (in millions of US dollars)
Bank Name
Urban Bank
540
Mega Bank
1,500
Hometown Bank
660
Bulk Bank
1,265
1,245
Nationwide Bank
Metropolitan Bank
City Bank
880
1,350
American Bank
710
Atlantic Savings
1,185
1. Based on the information on the table above, calculate the four-firm concentration ratio and the
Herfindahl-Hirschman index in the current market.
2. Basod on the FTC and DOJ Horizontal Merger Guldelines described in the text, do you think the
Justice Department is likely to challenge the proposed merger? Explain your answer!

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