### Exercise: Market Concentration**Assumption:**- There are 10 firms of equal size in an industry.**Tasks:****a) Change in Concentration Ratio**- If two of the firms merge, find the change in the concentration ratio. - **Concentration ratio change: [ ] %****b) Change in Herfindahl-Hirschman Index**- Find the change in the Herfindahl-Hirschman index. - **H-H index change: [ ]**### Explanation:This exercise involves calculating how market concentration changes when firms in an industry merge. It focuses on two key metrics:- **Concentration Ratio:** A measure that indicates the total market share owned by the largest firms in the industry.- **Herfindahl-Hirschman Index (HHI):** A common metric used to determine market concentration by squaring the market share of each firm and summing these values.Complete the blanks after performing the necessary calculations.

market share of 10 firms of equal size is 10% each.

Answered: ) If two of the firms merge, find the…

) If two of the firms merge, find the change in the concentration ratio: Concentration ratio change: |% ) Find the change in the Herfindahl-Hirschman index.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Ten firms compete in a market to sell product X. The total sales of all firms selling the product are $1,500,000. Ranking the firms' sales from highest to lowest, we find the top four firms' sales to be $375,000, $305,000, $245, 000, and $ 195,000, respectively. Calculate the four - firm concentration ratio in the market for product X.
**Practice**
Use the following table to calculate the Herfindal-Hirshman Index for the U.S. auto market. Would the FTC approve a merger between Gm and Ford? Explain your response. The table is......... GM 19% Ford 17% Toyota 14% Chrysler 11%
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