1.Suppose that emergency room services in a city are provided by three hospitals. Two of the hospitals each have a market share of 40% and the third hospital has a market share of 20%. Compute the pre-merger and post-merger HHI for this market if the two largest hospitals merge.

2.The market for physiotherapists is competitive. Chiropractic services and physiotherapy services are substitutes. Currently the price per visit is $40 and the quantity utilized is 30,000 visits annually. Physiotherapists face stiff competition from chiropractors. Currently, chiropractors charge $35 per visit and there are 15,000 visits annually in the region. The chiropractic association has decided to license another 20 practitioners in the region. This will lower the price to $25 per visit. There is no change in the supply of physiotherapists. What will be the direction of the effect of the change in chiropractors on the price and quantity utilized for physiotherapy services?

3.When a generic is introduced in the pharmaceutical industry, the price of the affected brand name drug may, contrary to expectations, increase in the short run before declining a while later. How would you explain this phenomenon?