1. (Mergers and Public Policy)Under what circumstances, and why, would the government be opposed to a merger of two firms? How does the Justice Department decide which mergers to challenge? Please refer to the following for research starting point: https://www.justice.gov/atr/herfindahl-hirschman-index

For instance, (and to clarify), consider/read the 3 examples below: the Herfindahl-Hirschman Index (HHI) for each of the following industries. Which industry is the most concentrated?

a. An industry with five firms that have the following market shares: 50 percent, 30 percent, 10 percent, 5 percent, and 5 percent.

b. An industry with five firms that have the following market shares: 60 percent, 20 percent, 10 percent, 5 percent, and 5 percent.

c. An industry with five firms, each of which has a 20 percent market share.

a. Herfindahl-Hirschman Index = 3,550 [(50²) + (30²) + (10²) + (5²) + (5²)]

b. Herfindahl-Hirschman Index = 4,150 [(60²) + (20²) + (10²) + (5²) + (5²)]

c. Herfindahl-Hirschman Index = 2,000 [(20²) + (20²) + (20²) + (20²) + (20²)]

According to the Herfindahl-Hirschman Index, the industry described in part b is the most concentrated because of the dominance of the largest firm.