Homework #5 Econ 330 Fall 2022 Assigned on Wednesday October 26. Due on Monday October 31, by 1.00PM. Please upload your work on Blackboard. You need to solve some equations for this homework, so you may want to upload a photo or scan your handwritten answers. Please don't use the HEIC format. I can't open that file format. Please do not email me your homework. Late homework is NOT accepted. This is even more challenging than homework 4. I wish you the best of luck! It is fine if you don't have perfect answers for all parts. Show some effort, try a few things, and most importanty: upload your work before the deadline. PART 1. Reading! Uploaded on Backboard. Read page 121 - 130 of the article "A Historical Comparison of Resource-Based Theory and Five Schools of Thought within Industrial Organization Economics: Do We Have a New Theory of the Firm?" by Kathleen R. Conner. Published in the Journal of Management in March 1991 vol. 17 no. 1 pages 121-154. Write short answers for the following: A. What is the S-C-P story for industry concentration causing excess profits / inefficiencies? B. What is the Chicago School's response to the S-C-P story? What is meant by "in the Chicago view, size and scope of the firm are determined by its efficiency"? PART 2. Are existence of profits / higher rates of return a sure sign of market power and DWL inefficiency? Imagine two industries: Industry A: All firms use a common technology with the cost function c(q) = 50+ 10q + 2q. Industry B: Most firms use a common technology with the cost function c(q) = 50 + 10q + 2q?, but two firms in the industry have, for some unexplained reason, a superior technology with this cost function: c(q) = 50 + 10q + q. The market demand is given by Q(P) = 80 -P in both industries. Your task is to compare the long run equilibrium in these industries: A. Which industry will have a higher profit/revenue ratio (which is used as a proxy for the market power index L when only industry totals for profit and revenues are available) B. In which industry do we have higher concentration as measured by HHI? C. How is the profit/revenue ratio which is a proxy for L (as defined in part a above) correlated with HHI across these two industries? D. Explain how part 2 is related to part 1 of the