The following table represents the market share percentage for each firm in a hy

Question

The following table represents the market share percentage for each firm in a hypothetical industry Firm Market Share A B C DE F G H 20 19 15 7 6 0 12 11 The four-firm concentration ratio for this industry is. (Enter your response as an integer.) The Herfindahl-Hirschman Index (HHI) for this industry isEnter your response as an integer.) Would the Justice Department consider this industry as unconcentrated, moderately concentrated, or concentrated? A. OB. ° C. Unconcentrated because the four-firm concentration ratio is under 90. Concentrated because the four-firm concentration ratio is over 60. Mildly concentrated because the HHI is under 2,000. D. Moderately concentrated because the HHI is below 1,800. Suppose firms D, E, and F merge. The value of the HHl following this merger is. (Enter your response as an integer.) Would the Justice Department most likely challenge this merger? Why or why not? o A. Yes, according to antitrust laws, any time a merger raises the HHI-even by 50 points-it must be challenged. 0 B. No, the HHI for this industry would have to be over 1,800 for the Justice Department to challenge the merger. ° C. Yes, because the merger would increase the HHI by more than 100 points. D. No, even though the merger increases the HHI, the industry is still considered unconcentrated.

Explanation / Answer

Four-firm concetration ratio is 66

THE HHI is 1436

Option D. Since the HHI is below 1436

The value of HHI following this merger is 185

Option D

If a proposed merger results in an HHI value of 1500 or less is considered unconcentrated and highly competitive, for this FTC generally would not object to such a merger.

Firm Market Share 4-Firm Concentration HHI A 20 =20+19+15+12 400 B 19 361 C 15 225 G 12 144 H 11 121 F 10 100 D 7 49 E 6 36 66 percent 1436

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.