× Outlook Web App X), W FINAL,HCMG-7325-201 Assignment FIN ion://gbkeegbaiigmenf

Question

× Outlook Web App X), W FINAL,HCMG-7325-201 Assignment FIN ion://gbkeegbaiigmenfmjfclcdgdpimamgkj/views/app.html Edits will not be automatically saved. Save now PART 3: ANALYTICAL QUESTIONS Show all your work for full credit 19. Suppose there are N firms in Gollumania's hospital market with equal market shares (12pts) Suppose N-2. What is the HHI? What can you say about competition level of the market (competitive/concentrated/highly concentrated)? a) b) Now suppose N-3. What is the HHI? What can you say about competition level of the market (competitive/concentrated/highly concentrated)? c) How many firms with equal market shares do we need to satisfy that the market is moderately concentrated? Justify your answer showing all your calculations. d) How many firms with equal market shares do we need to satisfy that the market is e) The number of hospitals (each has the same market share) in Gollumania increases competitive? Justify your answer showing all your calculations. from 4 to 8 in a year time. Given the prices are administratively set in this hospital market do you expect hospital quality to increase?

Explanation / Answer

e) No, because the hospitals are under perfectly competitive structure with n>6. So the price charged perfect competition is less and profit is zero. therefore increase in quality is not expected. This will only bring down profits.

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