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An industry consists of three firms with sales of $225,000, $45,000, and $315,000.   Calculate the Herfindahl-Hirschman index (HHI).  Calculate the four-firm concentration ratio (C4).  Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, do you think the Department of Justice would attempt to block a horizontal merger between two firms with sales of $225,000 and $315,000? Explain.

An industry consists of three firms with sales of $225,000, $45,000, and $315,000.   Calculate the Herfindahl-Hirschman index (HHI).  Calculate the four-firm concentration ratio (C4).  Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, do you think the Department of Justice would attempt to block a horizontal merger between two firms with sales of $225,000 and $315,000? Explain.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter16: Government Regulation
Section: Chapter Questions
Problem 3E
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An industry consists of three firms with sales of $225,000, $45,000, and $315,000.  

  1. Calculate the Herfindahl-Hirschman index (HHI). 
  2. Calculate the four-firm concentration ratio (C4). 
  3. Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, do you think the Department of Justice would attempt to block a horizontal merger between two firms with sales of $225,000 and $315,000? Explain. 
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