Problem $20-12$ Calculation of Change in the HHI Associated with a Merger $($LG$20-2)$

Cakes Corporation currently has a $80$ percent market share in baking services, followed by Cookies, Incorporated with $10$ percent and

Dippen Dough with $10$ percent.

a$.$ What is the concentration ratio as measured by the Herfindahl$-$Hirschman Index $(HHI)?$

b$.$ If Cakes Corporation acquires Cookies, Incorporated what will be the new HHI?

c$.$ Assume the Justice Department will allow mergers as long as the changes in HHI do not exceed $1,200.$ What is the minimum

amount of assets that Cakes Corporation will have to divest after it merges with Cookies, Incorporated?

Note: Round your answer to $4$ decimal places.