9.3 QUESTIGNS Qussnon 9.] The whole-sale and retail book markets in the United States have a fair amount of concentration. The three largest book retailers [Barnes and Noble. Battlers. and Books-A-Million) all but,I their books li'om Ingram. The market share {MS} of these rms and the average cost (AC) of their operations {relative to the list price of a book] is shown in the table below: Wholesale Books Retail Books Firm and Otherslil Gilli-each U.7|25 Otherstt' Dleaeh NOTES: a. Average cost is treasured as a percentage of the list price of the book. In. This is the additional average cost {AAC} so the total average cost 1would be the input priee [or a book plus the MC. From this we can infer that the minimum point of the average cost (AC) function occurs when a rm has 30'}- of the wholesale hook market- Furthermore. the minimum point of the additional average cost function {AAC} occurs when a rm has [0% ofthe retail book market. 3. Calculate the HHI and ll:4 indices for the wholesale book and retail book markets. I b. IF the current wholesale market price for a book is 50% the list price. what is the profit margin for the I I book wholesalers? I Would the HHl for the wholesale book market increase or decrease in the long-run? Explain. e. 1What is the prot margin for each of the 63 book retailers if the retail market priee was 30% the list price {still assuming a wholesale market price of 511'} of the list price}? It What would we expect to see happen in the retail book market in the long-run? d. If Baker and Taylor merged with Bookazine. what would the change in HHI be for the wholesale book market? It Do you think the US. government would approve this merger"? Explain