ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 4.7P
To determine
The Herifindahl-Hirschman Index (HHI) for each of the following industries and the industry that is the most concentrated
- An industry with five firms with market shares: 50 percent, 30 percent, 10 percent, 5 percent, and 5 percent.
- An industry with five firms with market shares: 60 percent, 20 percent, 10 percent, 5 percent and 5 percent
- An industry with five firms, each having a 20 percent market share.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
2. Philip Morris and R.J. Reynolds spend huge sums of money each year to advertise their tobacco products in an attempt to steal customers from each other. Suppose each year Philip Morris and R.J. Reynolds have to decide whether or not they want to spend money on advertising. If neither firm advertises, each will earn a profit of $2 million. If they both advertise, each will earn a profit of $1.5 million. If one firm advertise and the other does not, the firm that advertises will earn a profit of $2.8 million and the other firm earn $1 million.c. Use a payoff matrix to depict this problem.d. What is the dominant strategy for Philip Morris and R.J. Reynolds?e. What is the Nash Equilibrium without an enforceable contract?
1.Microsoft is one of the leading software companies. Prior to 2000, Microsoft’s share of the market for personal computer operating systems stood above 80 per cent. However, since the twenty-first century Microsoft’s market share has steadily declined to 40 per cent. This is due to the rise in competing software producers such as Apple macOS (10%), Google's Android OS (35%), Linux Operating System (35%), and Apple iOS (5%). The market share of each company is provided in parentheses. Google and Linux have decided that it would be in their best interest to work together to serve the market. This is not common knowledge to the person’s outside of the companies.
i. Draw how equilibrium price and quantity are determined in this industry. Hi does this refer to the monopoly market structure diagrams?
2. Allsmart’s demand curve is given by Q=10-P for its dishwashers. The marginal and average cost is $3 per dishwasher produced. Complete the following table. Photo below concerns…
type plz
Knowledge Booster
Similar questions
- 1. There are 10 firms in an industry, and each firm has a market share of 10 percent. The industry’s Herfindahl index is a. 10. b. 100. c. 1,000. d. 10,000. 2. In the small town of Geneva, there are five firms that make watches. The firms’ respective output levels are 30 watches per year, 20 watches per year, 20 watches per year, 20 watches per year, and 10 watches per year. The four-firm concentration ratio for the town’s watch-making industry is: a. 5. c. 90. b. 70. d. 100. 3. Which of the following best describes the efficiency of monopolistically competitive firms? a. Allocatively efficient but productively inefficient. b. Allocatively inefficient but productively efficient. c. Both allocatively efficient and productively efficient. d. Neither allocatively efficient nor productively efficient.arrow_forward(Table: Demand Schedule of Whatchamacallits) Use Table: Demand Schedule of Whatchamacallits. The market for whatchamacallits consists of two producers, Emma and Joshua. Each firm can produce whatchamacallits with no marginal cost or fixed cost. Suppose that these two producers have formed a cartel, agreed to split production of output evenly, and are maximizing total industry profits. If Emma decides to cheat on the agreement and sell 100 more whatchamacallits, Emma's profit will be and Joshua's profit will be Table: Demand Schedule for Whatchamacallits Price of a Quantity of Whatchamacallit Whatchamacallits $10 9 8 7 6 5 4 3 2 1 0 a) $1,250; $1.250 b) $1,000; $1,400 c) $500; $500 d) $1,400; $1,000 Demanded 0 100 200 300 400 500 600 700 800 900 1,000arrow_forwardCarrot Computers and its competitors purchase touch screens for their tablet computers from several suppliers. The six makers of touch screens have market shares of, respectively, 19 percent, 18 percent, 14 percent, 16 percent, 20 percent, and 13 percent. a. What is the Herfindahl index for the touch screen manufacturing industry? b. By how much would a proposed merger between the two smallest touch screen makers increase the Herfindahl index? Would the government be likely to challenge that proposed merger? c. If Carrot Computers horizontally merges with its competitor Blueberry Handhelds, by how much would the Herfindahl index change for the touch screen industry?arrow_forward
- 3. The bicycle industry consists of seven firms. Firms 1, 2, 3, each has 20% of the market share, and Firms 4, 5, 6, 7, each has 10% of the market share. 3.а Calculate C4 for the industry. 3.b Calculate HHI for the industry. 3.с Now suppose that Firms 3 and 4 merge, so that the new merged firm has a market share of 30%. Calculate the change of HHI caused by this merger.arrow_forward1. Tom Jackson has been running a successful steakhouse that specializes in serving upscale steak dinners. His current marketing campaign targets residential households. Recently, it was announced that a new conference hotel was to open near his steakhouse, bringing in many potential business customers. Speculation followed that Morton's steakhouse-an upscale steakhouse chain currently marketing to business customers nationallywas considering opening one of its restaurants near the new hotel and would therefore compete with Tom's restaurant. In light of the potential threat from Morton's, Tom began considering the possibility of making a significant investment to change his marketing campaign and target businesses rather than households. In doing so, he estimated the following profit outcomes (in thousands of dollars) resulting from the strategies that he and Mortons might implement: Morton's Marketing Target Enter Don't Enter -$200, -850 $50, $100 $105, $0 Businesses $90, $0 Тоm…arrow_forwardJsing the data in the table below, find the change in the Herfindahl-Hirschman index if Microsoft sold its smartphone division to Research In Motion (RIM; also known as BlackBerry). Percentage Share of U.S. Smartphone Sales, 2050 Firm Percentage of sales Samsung Android 41 40% iPhone 43 30 RIM xix 20 Microsoft 35 10 Change in H-H index from sale:arrow_forward
- 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?arrow_forwardOnly typed answer and please answer correctlyarrow_forwardProblem 12-1 (Algo) 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%, 22%, 18%, 12%, 11%, 8%, and 4%. Instructions: Enter your answers as whole numbers. a. What is the four-firm concentration ratio of the hamburger industry in this town? 0%. b. What is the Herfindahl index for the hamburger industry in this town? c. If the top three sellers combined to form a single firm, what would happen to the four-firm concentration ratio and to the Herfindahl index? The four-firm concentration ratio would be O%. The Herfindahl index would bearrow_forward
- 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 Departmentarrow_forwardQuestion 3 Suppose QM Phones and UCL Phones each develop their own versions of a new smartphone. The new phones are different from the existing ones but each share similar functions and designs. The firms are trying to decide on the price of their unique phones. If they both charge high price, QM makes £6 million and UCL makes £5 million economic profits. If QM charges high price but UCL charges low price, they make £3 million and £7 million respectively. If however QM charges low price and UCL charges high price, they make £ £8 million and £1 million respectively. If both charge low price, QM earns £4 million and UCL earns £3 million economic profits. a) Describe the strategies in the game. Construct the payoff matrix. b) Does QM have a dominant strategy. Does UCL have a dominant strategy? Explain. c) If the game is played only once what is the equilibrium? Is it a dominant-strategy equilibrium? Explain. d) Is there a Nash equilibrium? Explain. What is the best outcome for either of…arrow_forwardSub : EconomicsFinancePls answer ASAP.Dnt CHATGPT.I ll upvote. Thank Youarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning