An industry is comprised of Firm 1, which controls 70 percent of the market, Firm 2 that controls 15 percent of the market, Firm 3 has 5 percent of the market and there are 20 other firms of equal size which control a total of 10 percent of the market (about 0.5 percent each).

(a) What is the Four firm concentration ratio (C4) of this industry? Please show your calculations.

(b) What is the Herfindahl - Hirschman Index (HHI) of this industry? Please show your calculations.

(c) If Firm 2 and Firm 3 merge, what is the HHI and C4 of the indsutry after the merger? Please show your calculations.