Imagine the U.S. government has hired you to conduct an initial analysis of proposed mergers. The U.S. government has provided you with the following table to use for conducting an initial analysis. When calculating the post-merger HHI, assume that the quantity of the merged firm equals the sum of the quantities of the merging firms prior to the merger and no other firm changes its quantity as a result of the merger.

Post-merger Herfindahl- Hirschman Indexe Change in Herfindahl- Hirschman Indexe Initial recommendatione Unconcentrated (1,800) 50 or lesse The merge is unlikely to have adverse competitive effects. Highly concentrated (>1,800) More than 502 The merger potentially raises significant anticompetitive concerns. The table below shows the market shares held by the soft-drink firms in 1986. Assume that the remaining 15% of the market is composed of 15 firms, each with a market share of 1%. Company Market share (percent) Coca-Cola 392 PepsiCo 282 T: Dr Pepper :7 7-Up 6e 3. PepsiCo announced its intention to buy 7-Up. Determine what the HHI would be post-merger assuming that PepsiCo's quantity after the merger equals the combined quantity of PepsiCo and 7-Up prior to the merger and neither Coca-Cola nor Dr Pepper change their quantities as a result of the merger. (1 point) 4. Use the table provided by the U.S. government to determine whether the merger between PepsiCo and 7-Up potentially raises significant anticompetitive concerns. (1 point) 5. The U.S. government decides to object to the merger of PepsiCo and 7-Up and the two companies abandon their plans to merge. Coca-Cola announced its intention to buy Dr Pepper. Determine what the HHI would be post-merger assuming that Coca-Cola's quantity after the merger equals the combined quantity of Coca-Cola and Dr Pepper prior to the merger and neither PepsiCo nor 7-Up change their quantities as a result of the merger. (1 point)