1. In the following market, is there likely to be an investigation by the US Department of Justice based on the HHI if firms C and D merge? Please show your calculations. Market share Firm A 50% Firm B 20% Firm C 10% Firm D 10% Firm E 10%

2. In the following matrix for the profits of two dry cleaners with the decision whether or not to offer discounts for regular customers. What do expect to happen? Why? Note: they cannot collude

	You don't offer discount	You offer discount
Rival doesn't offer discount	Rival gets $5000 You get $5000	Rival gets $3000 You get $6000
Rival offers discount	Rival gets $6000 You get $3000	Rival gets $4000 You get $4000