MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
11th Edition
ISBN: 9781264207718
Author: Colander
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 7QE
(a)
To determine
Find the Herfindahl and four-firm concentration ratios for the industries.
(b)
To determine
The industry suggested by an individual in the court if the individual were the Mattel’s economist.
(c)
To determine
Decreased competition using the merger.
(d)
To determine
Increased competition result from the merger.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Coca-Cola and PepsiCo are the leading competitors in the market for cola products. In 1960 Coca-Cola introduced Sprite, which today is the worldwide leader in the lemon-lime soft drink market and ranks fourth among all soft drinks worldwide. Prior to 1999, PepsiCo did not have a product that competed directly against Sprite and had to decide whether to introduce such a soft drink. By not introducing a lemon-lime drink, PepsiCo would continue to earn a $200 million profit and Coca-Cola would continue to earn a $300 million profit.
Suppose that by introducing a new lemon-lime soft drink, one of two possible strategies could be pursued: (1) PepsiCo could trigger a price war with Coca-Cola in both lemon-lime and cola markets or (2) Coca-Cola could acquiesce and each firm maintains its current 50/50 split of the cola market and split the lemon-lime market 70/30 in favor of Coca-Cola. If Pepsi introduced a lemon-lime drink and a price war resulted, both companies would earn profits of $100…
Coca-Cola and PepsiCo are the leading competitors in the market for cola products. In 1960 Coca-Cola introduced Sprite, which today is among the worldwide leaders in the lemon-lime soft drink market and ranks in the top 10 among all soft drinks worldwide. Prior to 1999, PepsiCo did not have a product that competed directly against Sprite and had to decide whether to introduce such a soft drink. By not introducing a lemon-lime soft drink, PepsiCo would continue to earn a $200 million profit, and Coca-Cola would continue to earn a $300 million profit.
Suppose that by introducing a new lemon-lime soft drink, one of two possible strategies could be pursued:
- PepsiCo could trigger a price war with Coca-Cola in both the lemon-lime and cola markets
- Coca-Cola could acquiesce and each firm maintains its current 50/50 split of the cola market and split the lemon-lime market 30/70 (PepsiCo/Coca-Cola).
- If PepsiCo introduced a lemon-lime soft drink and a price war resulted, both companies…
In 1983, Motorola accounted for seventy five percent of the mobile phone market. But by 2019, its market share had shrunk to just 2.2%. In 1983, the Motorola launched one of the world’s first commercially available mobile phones—the DynaTAC 8000X. Motorola went on to launch a few more devices over the next few years and quickly became a dominant player in the emerging industry. In the early days of the market, the company’s only serious competitor was Finnish multinational Nokia. By the mid-1990s, other competitors like Sony and Siemens started to gain some solid footing, which chipped away at Motorola’s dominance. In September 1995, the company’s market share was down to 32.1%. By January 1999, Nokia surpassed Motorola as the leading mobile phone manufacturer, accounting for 21.4% of global market share. That put it just slightly ahead of Motorola’s 20.8%.
Describe the market for mobile phones in 1983 and illustrate how equilibrium price and quantity determined in this industry and…
Chapter 15 Solutions
MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
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
Knowledge Booster
Similar questions
- Do not use chatgpt.arrow_forwardIn November 2007, Google unveiled the Android mobile operating system as discussed in their EY2007 10K. Based on Microsoft's EY2008 10K and Google's 10K's, what Microsoft:Google couple of evidence might lead Microsoft's management to believe they were rational about not mentioning Google Android as a Mobile OS competitor? Conversely, what Microsoft:Google couple of evidence might lead Google management to believe they were rational about launching a new phone given the number and size of existing mobile phone competitors? Select the single best available answer from those presented below. Microsoft expended over $8.2B in R&D:Google spent under $2.28: Windows Mobile capabilities Android combination of capabilities O Microsoft was concerned they may not be able to adequately protect their intellectual property rights Google does not have any risks about their intellectual property rights with respect to Android; Windows Mobile growing market share: Google faced Apple, Microsoft, Nokia,…arrow_forwardA company does $100 million in sales. It has some degree of pricing power in that it sells its output for $10 where it costs it $8 to make. Its advertising is highly effective. For every one percent it increases its advertising budget, its output increases by five percent. Unfortunately, its advertising is very aggressive because it causes its competitors to increase theirs by two percent for every one percent the company increases its own. When its competitors increase their one percent, it causes problems for the company in that demand for its output falls by b. budgets by two percent. Calculate how much, in dollars, the company should spend on advertising.arrow_forward
- While there is a degree of differentiation between major grocery chains like Albertsons and Kroger, the regular offering of sale prices by both firms for many of their products provides evidence that these firms engage in price competition. For markets where Albertsons and Kroger are the dominant grocers, this suggests that these two stores simultaneously announce one of two prices for a given product: a regular price or a sale price. Suppose that when one firm announces the sale price and the other announces the regular price for a particular product, the firm announcing the sale price attracts 1,000 extra customers to earn a profit of $5,000, compared to the $3,000 earned by the firm announcing the regular price. When both firms announce the sale price, the two firms split the market equally (each getting an extra 500 customers) to earn profits of $2,000 each. When both firms announce the regular price, each company attracts only its 1,500 loyal customers and the firms each earn…arrow_forwardWhile there is a degree of differentiation between major grocery chains like Albertsons and Kroger, the regular offering of sale prices by both firms for many of their products provides evidence that these firms engage in price competition. For markets where Albertsons and Kroger are the dominant grocers, this suggests that these two stores simultaneously announce one of two prices for a given product: a regular price or a sale price. Suppose that when one firm announces the sale price and the other announces the regular price for a particular product, the firm announcing the sale price attracts 1,000 extra customers to earn a profit of $5,000, compared to the $3,000 earned by the firm announcing the regular price. When both firms announce the sale price, the two firms split the market equally (each getting an extra 500 customers) to earn profits of $2,000 each. When both firms announce the regular price, each company attracts only its 1,500 loyal customers and the firms each earn…arrow_forwardIf the largest two firms in the textbook industry merged, their new total market share would equal 41% of the market. This industry's new HHI would be 2182. According to the FTC's historical guidelines for mergers, would the FTC approve this merger? Group of answer choices No answer text provided. Maybe. The FTC would scrutinize the merger and make a case-by-case decision. Yes, the FTC would ignore the merger and allow it to go through. No, the FTC would probably challenge the merger.arrow_forward
- At a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg's was quoted as saying, for the past several years, our individual company growth has come out of the other fellow's hide." Kellogg's has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg's and its largest rival advertise, each company earns $1 billion in profits. When neither company advertises, each company earns profits of $9 billion. If one company advertises and the other does not, the company that advertises earns $49 billion and the company that does not advertise loses $4 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising? Instruction: Enter your response as a percentage rounded to the nearest whole number. percentarrow_forwardThe opioid epidemic causing a staggering number of deaths each year in the United States is largely caused by two drugs: heroin and fentanyl. Much of the heroin is supplied by several major organized Mexican cartels while the much stronger fentanyl is mostly produced in hundreds of labs (big and small) in China. The market structure for heroin can be considered as an oligopoly that operates as a monopoly. On the other hand, the fentanyl industry is less organized in terms of cartel organization and therefore more competitive. How do the differences in the organization of both industries explain why deaths from fentanyl have skyrocketed in recent years? The organized heroin cartel A.does not have barriers to market entry. The more competitive fentanyl industry has substantial barriers to entry, making fentanyl a more available drug. B.has the ability to control quantity and raise the prices. The more competitive fentanyl industry makes more of the drug available at a lower…arrow_forwardArcher Daniels Midland (ADM) and Cargill are the biggest makers of high-fructose corn syrup (HFCS), used to sweeten Coke, Pepsi, and other non-diet soft drinks. Each firm is currently choosing between increasing or decreasing their price for HFCS. The table below gives each firm's profits in each possible situation. A is Archer Daniels Midland and C is Cargill. For purposes of this question, ignore the existence of other HFCS makers. Cargill P increase P decrease P increase A: $500 million A: $200 million C: $400 million C: $500 million ADM P decrease A: $600 million A: $350 million C: $200 million C: $300 million a. Assuming the two firms do not cooperate, does either have a dominant strategy? If so, what is it? b. If ADM and Cargill decide to cooperate, how, if at all, will the outcome differ from part a? Would this case be an evample of a repeated or a pon-reneated game?arrow_forward
- At a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg’s was quoted as saying, “ . . . for the past several years, our individual company growth has come out of the other fellow’s hide.” Kellogg’s has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg’s and its largest rival advertise, each company earns $0 billion in profits. When neither company advertises, each company earns profits of $8 billion.If one company advertises and the other does not, the company that advertises earns $43 billion and the company that does not advertise loses $4 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising?Instruction: Enter your response as a percentage rounded to the nearest whole number.i ≤ percentarrow_forwardAt a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg’s was quoted as saying, “ . . . for the past several years, our individual company growth has come out of the other fellow’s hide.” Kellogg’s has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg’s and its largest rival advertise, each company earns $2 billion in profits. When neither company advertises, each company earns profits of $16 billion.If one company advertises and the other does not, the company that advertises earns $56 billion and the company that does not advertise loses $4 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising?Instruction: Enter your response as a percentage rounded to the nearest whole number.arrow_forwardAt a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg’s was quoted as saying, “ . . . for the past several years, our individual company growth has come out of the other fellow’s hide.” Kellogg’s has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg’s and its largest rival advertise, each company earns $0 in profits. When neither company advertises, each company earns profits of $12 billion. If one company advertises and the other does not, the company that advertises earns $52 billion and the company that does not advertise loses $4 billion. Under what conditions could these firms use trigger strategies to support the collusive level of advertising?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
- Survey of Economics (MindTap Course List)EconomicsISBN:9781305260948Author:Irvin B. TuckerPublisher:Cengage LearningExploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Survey of Economics (MindTap Course List)
Economics
ISBN:9781305260948
Author:Irvin B. Tucker
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc