An industry has 50 firms, each with a market share of 2 percent. There is no foreign competition, entry into theindustry is difficult, and no firm is on the verge of bankruptcy.a. If 20 of the firms in the industry seek to merge, the Herfindahl index would change from120 to 1,600.120 to 200.200 to 1,720.1,720 to 1,720.b. This merger wouldnot be challenged.be challenged, because of the substantial change in the Herfindahl index only.be challenged, because of the value of the new Herfindahl index and the substantial change in the index.be challenged, because of the value of the new Herfindahl index only.

Change in the Herfindahl IndexThe Herfindahl Index (HHI) is a measure of market concentration, which…

Answered: An industry has 50 firms, each with a…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 12P

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Suppose that three firms make up the entire wig manufacturing industry. One has a 50% market share, and the other two have a 25% market share each. The Herfindahl index of this industry is _____. a. 3,750 b. 1,000 c. 10,000 d. 5,000 e. 2,500 Mane Attraction, one of the firms with a 25% market share in the wig manufacturing industry, leaves the market. This would cause the Herfindahl index for the industry to _____. a. remain the same b. fall c. rise The largest possible value of the Herfindahl index is 10,000 because: a. an index of 10,000 corresponds to 100 firms with a 1% market share each b. an index of 10,000 corresponds to a monopoly firm with 100% market share c. an industry with an index higher than 10,000 is automatically regulated by the Justice Department
Suppose that a small town has seven burger shops whose respective shares of the local hamburger market are (as percentages of all hamburgers sold): 26 percent, 24 percent, 20 percent, 12 percent, 9 percent, 6 percent, and 3 percent. Instructions: Enter your answers as a whole number. a. What is the four-firm concentration ratio of the hamburger industry in this town? Book percent Print b. What is the Herfindahl index for the hamburger industry in this town? erences c. If the top three sellers combine to form a single firm, what would happen to the four-firm concentration ratio and to the Herfindahl index? Four-firm concentration ratio = percent Herfindahl index =
Unsure which is the correct answers Suppose that three firms make up the entire wig manufacturing industry. One has a 50% market share, and the other two have a 25% market share each. The Herfindahl index of this industry is a. 3,750 b. 1,000 c. 10,000 d. 5,000 e. 2,500 Mane Attraction, one of the firms with a 25% market share in the wig manufacturing industry, leaves the market. This would cause the Herfindahl index for the industry to __-- a. remain the same b. fall c. rise The largest possible value of the Herfindahl index is 10,000 because: a. an index of 10,000 corresponds to 100 firms with a 1% market share each b. an index of 10,000 corresponds to a monopoly firm with 100% market share c. an industry with an index higher than 10,000 is automatically regulated by the Justice Department
Carrot Computers and its competitors purchase touch screens for their tablet computers from several suppliers. The slx makers of touch screens have market shares of, respectively, 19 percent, 18 percent, 12 percent, 18 percent, 21 percent, and 12 percent. Instructions: Enter your answers as a whole number. a. What is the Herfindahl index for the touch screen manufacturing industry? ok b. By how much would a proposed merger between the two smallest touch screen makers increase the Herfindahl index? rint Is the government likely to challenge that proposed merger? brences (Click to select) : c. If Carrot Computers horizontally merges with its competitor Blueberry Handhelds, by how much would the Herfindahl index change for the touch screen industry?
Suppose that a small town has seven burger shops whose respective shares of the local hamburger market are (as percentages of all hamburgers sold): 25 percent, 24 percent, 18 percent, 12 percent, 11 percent, 6 percent, and 4 percent. Instructions: Enter your answers as a whole number. a. What is the four-firm concentration ratio of the hamburger industry in this town? percent b. What is the Herfindahl index for the hamburger industry in this town? c. If the top three sellers combine to form a single firm, what would happen to the four-firm concentration ratio and to the Herfindahl index? Four-firm concentration ratio = percent Herfindahl index =
Firm Market Share (%) A B C D E F 30 22 18 17 7 6 Refer to the data. Suppose that firms in this industry split up such that there were 50 firms, each with a 2 percent market share. The four-firm concentration ratio and the Herfindahl index respectively would be Multiple Choice 8 percent and 200. 8 percent and 8. 200 percent and 16. 100 percent and 10,000.
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?
Suppose that the top six firms in an industry have total annual sales of $150 billion, $100 billion, $90 billion, $60 billion, $50 billion, and $10 billion, respectively. Instructions: Round your final answers to the nearest whole number. a. What is the four-firm concentration ratio for this industry? percent b. What is the Herfindahl index for this industry? ces c. Suppose another industry has a Herfindahl index of 1,500. Are firms in the second industry likely to have more or less market power? (Click to select)
The table below shows revenue data for different firms producing refrigerators. Use the given information to find the market share of each firm. The "other" row is comprised of a number of small firms. Round each value to 2 decimal points. SI Firm % Acme Co Baluga, LLC Cran Inc Delta Co Eagle Inc Fox Inc What is the Four Firm Concentration Ratio? Other Revenue in $ 245.00 595.00 105.00 170.00 725.00 515.00 990.00 Market Share in % ← A - ← A ←
Question 10
Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition, or oligopoly.a. Industry A has a four-firm concentration ratio of 0.005 percent and a HerfindahlHirschman index of 75. A representative firm has a Lerner index of 0.45 and a Rothschild index of 0.34.b. Industry B has a four-firm concentration ratio of 0.0001 percent and HerfindahlHirschman index of 55. A representative firm has a Lerner index of 0.0034 and Rothschild index of 0.00023.c. Industry C has a four-firm concentration ratio of 100 percent and HerfindahlHirschman index of 10,000. A representative firm has a Lerner index of 0.4 and Rothschild index of 1.0.d. Industry D has a four-firm concentration ratio of 100 percent and HerfindahlHirschman index of 5,573. A representative firm has a Lerner index equal to 0.43 and Rothschild index of 0.76
Suppose that the most popular car dealer in your area sells 25 percent of all vehicles. Instructions: Enter your answers as a whole number. a. If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car dealers in your area? b. In that same situation, what would the four-firm concentration ratio be? percent

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