4.Suppose that there are two industries, A and B. There are four firms in industry A with sales at $5 million, $2 million, $1 million, $1 million, , respectively. There are four firms in industry B with equal sales of $2.5 million for each firm.

(a) Please calculate the four firm concentration ratio (C4) for industry A. Please show your calculations.

(b) Please calculate the four firm concentration ratio (C4) for industry B.

(c) Please calculate the Herfindahl-Hirschman index for industry A. Please show your calculations.

(d) Please calculate the Herfindahl-Hirschman index for industry B. Please show your calculations.

5. Some years ago T-Mobile (cell phone service provider) and Sprint (another cell phone service provider) merged (the current T-Mobile is the result of that merger).

(a) Was this merger a horizontal merger or a vertical merger? Please give an explanation.

(b) Why do you think T-Mobile and Sprint decided to merge (what do you think the benefits of the merger were for the two companies)? Please give an explanation.

6.Alpha Industries operates in a reasonably competitive market. While there are few other firms in the industry due to the high fixed costs of building plants, rival firms are very aggressive in their pricing strategies and attempt to gain market share by charging lower prices than their competitors. Of the products sold in this industry, over 80 percent have 10 years of patent protection remaining. Does this industry meet an economist's definition of a perfectly competitive industry (does this industry satisfy all the assumptions of perfect competition)? Please give an explanation.

7."A monopoly firm can charge as high a price as it wants to, and therefore will always earn a profit". Do you agree or disagree with this statement? Please give an explanation.