Microeconomics
10th Edition
ISBN: 9781259655500
Author: David C Colander
Publisher: McGraw-Hill Education
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Question
Chapter 15, Problem 3IP
(a)
To determine
The reason why Mattel want to buy Fisher-price.
(b)
To determine
The arguments in favor of allowing this acquisition.
(c)
To determine
The arguments against allowing this acquisition.
(d)
To determine
The comparison of the four-firm concentration ratio for the entire toy industry to the pre-school toy market.
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Suppose that the six firms in industry A have annual sales of 40, 35, 12, 5, 5, and 3 percent of total industry sales. For the six firms in industry B, the figures are 35, 18, 15, 14, 10, and 8 percent. b. Calculate the four-firm concentration ratio and the Herfindahl index for each industry and compare their likely competitiveness. Instructions: Enter your answers as whole numbers.
Industry A four-firm concentration ratio =
Industry A Herfindahl index = Industry B four-firm concentration ratio =
Industry B Herfindahl index =
c. Industry A will be ________ (more/less) competitive than industry B.
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Calculate the four-firm concentration ratio (CR-4) given the sales data. Assume that the firms listed are the only firms in
this market.
Sales (millions of dollars)
7.4
7.1
Expressive
6.8
LA & Company
6.2
5.3
Forever 22
Limitless
4.2
What is the four-firm concentration ratio? Round to the nearest whole percent in your calculations.
Retailer
Dap
American Jaybird
Two car manufacturers, Saab and Volvo, have fixed costs of $1 billion and marginal costs of $15,000 per car. If Saab produces 500,000 cars per year and Volvo produces 200,000 cars per year, calculate the average production cost for each company.
Average production cost for Saab: $ __ .Average production cost for Volvo: $ __ .On the basis of these costs, which company's market share do you think will grow in relative terms?
Chapter 15 Solutions
Microeconomics
Ch. 15.1 - Prob. 1QCh. 15.1 - Prob. 2QCh. 15.1 - Prob. 3QCh. 15.1 - Prob. 4QCh. 15.1 - Prob. 5QCh. 15.1 - Prob. 6QCh. 15.1 - Prob. 7QCh. 15.1 - Prob. 8QCh. 15.1 - Prob. 9QCh. 15.1 - Prob. 10Q
Ch. 15 - Prob. 1QECh. 15 - Prob. 2QECh. 15 - Prob. 3QECh. 15 - Prob. 4QECh. 15 - Prob. 5QECh. 15 - Prob. 6QECh. 15 - Prob. 7QECh. 15 - Prob. 8QECh. 15 - Prob. 9QECh. 15 - Prob. 10QECh. 15 - Prob. 11QECh. 15 - Prob. 12QECh. 15 - Prob. 13QECh. 15 - Prob. 14QECh. 15 - Prob. 15QECh. 15 - Prob. 16QECh. 15 - Prob. 17QECh. 15 - Prob. 18QECh. 15 - Prob. 1QAPCh. 15 - Prob. 2QAPCh. 15 - Prob. 3QAPCh. 15 - Prob. 4QAPCh. 15 - Prob. 5QAPCh. 15 - Prob. 1IPCh. 15 - Prob. 2IPCh. 15 - Prob. 3IPCh. 15 - Prob. 4IPCh. 15 - Prob. 5IPCh. 15 - Prob. 6IPCh. 15 - Prob. 7IP
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Similar questions
- Calculate the four-firm concentration ratio (CR-4) given the sales data. Assume that the firms listed are the only firms in this market. Sales (millions of dollars) 7.4 7.1 6.8 6.2 5.3 4.2 What is the four-firm concentration ratio? Round to the nearest whole percent in your calculations. Retailer Dap American Jaybird Expressive LA & Company Forever 22 Limitless four-firm concentration ratio: 28arrow_forwardSuppose that the top six firms in an industry have total annual sales of $250 billion, $210 billion, $150 billion, $120 billion, $80 billion, and $60 billion, respectively. Instructions: Round your 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? (Hint: To find the Herfindahl index, you will need to compute the percentage market share for each firm in the industry. When calculating market share, do not round your intermediate calculations.)arrow_forwardPart G H Iarrow_forward
- One measure of the extent of competition in an industry is the concentration ratio. What level of concentration indicates that an industry is an oligopoly? Most economists believe that a four-firm concentration ratio of greater than 40 percent indicates that an industry is an oligopoly. (Enter your response as an integer.) Is the concentration ratio an accurate measure of the extent of competition? The four-firm concentration ratio OA. is flawed in that it is calculated for local markets even though competition in some industries is national. ○ B. is accurate because it is based on national and global competition. ○ C. is flawed in that it includes sales in the U.S. by foreign firms. D. is accurate because it is based on estimates from the U.S. Census Bureau. E. is flawed in that it does not measure competition between industries.arrow_forwardConsider the argument: Price-match guarantees are bad for consumers because they eliminate any incentive for competitors to reduce prices. When you think it through, it's obvious that they eliminate price competition; ACME wouldn't win any of Globex's customers by offering a discount if Globex will give the same discount. The argument is extended; that is, there's a main argument and an argument for one of the premises. What is the main conclusion? O ACME wouldn't win any of Globex's customers by offering a discount if Globex will give the same discount. o Ensuring that customers will pay the lowest available price is good for consumers. O Price-match guarantees eliminate any incentive for competitors to reduce prices. O Price-match guarantees are bad for consumers.arrow_forwardSuppose that a small town has seven burger shops whose respective shares of the local hamburger market are (as percentages of all hamburgers sold): 18 percent, 24 percent, 20 percent, 11 percent, 10 percent, 9 percent, and 8 percent. The four-firm concentration ratio for the hamburger industry in this town is percent. (Enter your response as a whole number.) The Herfindahl index for the hamburger industry in this town is (Enter your response as a whole number.) Suppose the top three sellers combined to form a single firm. The four-firm concentration ratio would be percent. (Enter your response as a whole number.) Suppose the top three sellers combined to form a single firm. The Herfindahl index would be (Enter your response as a whole number.)arrow_forward
- If the top two companies in the fast food industry merged, their new market share would equal 17% of the market. This industry's new HHI would be 845. According to the FTC's historical guidelines for mergers, would the FTC approve this merger? Select the correct answer below: Yes, the FTC would ignore the merger and allow it to go through. Maybe. The FTC would scrutinize the merger and make a case-by-case decision. No, the FTC would probably challenge the merger Give step by step answer with final solutionarrow_forwardSuppose 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)arrow_forwardNonearrow_forward
- Suppose that two firms are Cournot competitors. Industry demand is given by: P = 200 – Q, where Q is the combined output of the two firms. If both Firm 1 and Firm 2 face constant marginal and average total costs of $20: a. Solve for the Cournot price, quantity, and firm profits. b. Suppose that Firm 1 is considering investing in costly technology that will enable it to reduce its costs to $14 per unit. How would this change the equilibrium values you found in part a? How much should Firm 1 be willing to pay if such an investment can guarantee that Firm 2 will not be able to acquire it? c. If Firm 2 tries to counteract Firm 1's new technology by changing this game to Stackelberg Competition in which they (Firm 2) moves first (after Firm 1 adopts their new technology), what will be the new equilibrium values of price, quantity and firm profits? Will this strategy work for Firm 2?arrow_forwardASAP!!arrow_forwardAssume there are six companies in a certain industry. Four companies have $10 sales apiece, while two companies have $5 sales each. What is the industry's four-firm concentration ratio?arrow_forward
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