2. Consider an industry with 10 firms whose market shares are given in the following frequency table:

Market Share Number of Firms 5 percent 2 10 percent 7 20 percent 1

a. Calculate the HHI for this industry.

b. Suppose one of the firms with a 5 percent market share announces a plan to buy the other firm with a 5 percent market share. Is the U.S. Department of Justice likely to challenge the merger? Why or why not?

c. Suppose the firm with the 20 percent market share announces a plan to buy one of the firms with a 5 percent market share. Is the U.S. Department of Justice likely to challenge the merger? Why or why not?

d. Suppose one of the firms with a 10 percent market share announces a plan to buy the firm with the 20 percent market share. Is the U.S. Department of Justice likely to challenge the merger? Why or why not?