Question 4 . Suppose an industry has ten firms . The market shares of each firm are : 25% , 15% , 10% , 10% , 8% , 8% , 7% , 70% , 5% and 5 % 10 a ( a ) What is the four -firm concentration ratio ? ( b ) What is the Herfindahl - Hirschman Index ? ( C ) According to the merger guidelines , if the HHI is in the range of 1000 -1800 after a merger , you will not allow the merger if it increased the HHI by 100 points or more . Would you allow a merger between the 2 firms that had 5 % market share each ? Would you allow a merger between the 2 firms that had 8 % market share each ? ( 1 ) Suppose the ten firms compete in a Cournot oligopoly in this industry , and and the current price elasticity of demand is - 0.8 . What are the profit margins for each of the four biggest firms ? What is the average profit margin ( weighted by each firm's market share ) of this industry