An industry consists of three firms with Sales of $200,000, $500,000 and $400,000.

a. Calculate the Herfindahl-Hirschmann Index (HHI) for this industry.

b. Calculate the four-firm concentration ratio (C₄).

c. Based on the FTC and DOJ Horizontal Merger Guidelines described in Chapter 7, explain specifically whether

you think the Department of Justice would attempt to block a horizontal merger between two firms with sales of

$200,000 and $400,000.Calculate the new concentration ratios that would result if this merger were to occur to

justify your answer.