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Consider an industry with 7 firms. The firms and their market shares are listed in the table below. Firm Market Share A 26% B 24%

Consider an industry with 7 firms. The firms and their market shares are listed in the table below.

Firm Market Share
A 26%
B 24%
C 20%
D 10%
E 8%
F 6%
G 6%

You will also need the FTC guidelines for post-merger HHI to answer the next question:

If the post-merger HHI is:

  • Less than 1,500
    • The merger will be allowed.
  • Between 1,500 and 2,500
    • The merger is unlikely to be challenged if it raised the HHI by less than 100.
    • The merger might be challenged if it raised the HHI by more than 100.
  • Greater than 2,500
    • The merger is unlikely to be challenged if it raised the HHI by less than 100.
    • The merger might be challenged if it raised the HHI by between 100 and 200.
    • The merger is likely to be challenged if it raised the HHI by more than 200.

Flag question: Question 4Question 42 pts

  1. Suppose Firm E and Firm F have proposed a horizontal merger. If they are allowed to merge into one firm, what would be the post-merger HHI for this industry? [ Select ] ["1,888", "2,048", "1,984", "1,000", "2,288", "2,848", "1,936", "1,960"]
  2. Consider the market share information for the industry with 7 firms shown above, along with the FTC guidelines listed above. According to the guidelines, how will the FTC react to the proposed merger between Firm E and Firm F? [ Select ] ["The merger is unlikely to be challenged.", "The merger is likely to be challenged.", "The merger might be challenged.", "The merger will be allowed."]

Flag question: Question 5Question 54 pts

Suppose a monopolist faces a demand curve given by the equation =2002. Marginal cost is constant and given by the equation =20.

  1. Using the information above, what is the monopolist's profit-maximizing level of output? units
  2. Assume marginal cost is equal to average total cost. How much profit will the monopolist make? Do not include commas or a dollar sign ($) in your answer.
  3. What would be the value of consumer surplus if this market was perfectly competitive? Do not include commas or a dollar sign ($) in your answer.
  4. What is the value of the deadweight loss created by the monopoly? Do not include commas or a dollar sign ($) in your answer.

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