QUESTION 9.1 rIhe wholesale and retail book markets in the United States have a fair amount of concentration. The three largest book retailers (Barnes and Noble. Borders, and BooksA Million) all buy their books from Ingram. The market share (MS) of these rms and the average cost (AC) of their operations (relative to the list price of a book]I is shown in the table below: Wholesale Books NOTES: a. Average cost is measured as a percentage of the list price of the book. b. This is the additional average cost (AAC) so the total average cost would be the input price for a book plus the AAC. From this we can infer that the minimum point of the average cost (AC) function occurs when a rm has 30% of the wholesale book market. Furthermore. the minimum point of the additional average cost function (AAC) occurs when a rm has 10% of the retail book market. a. Calculate the HHI and C 4 indices for the wholesale book and retail hook markets. N b. If the current wholesale market price for a book is 50% the list price, what is the prot margn for the ll hook wholesalers? H Wodd the I'll-H for the wholesale book market increase or decrease in the longrun? Explain. c. What is the prot margin for each (If the 63 book retailers if the retail market price was 80% the list price (still assuming a wholesale market price of 59% of the list price)?I N What would we expect to see happen in the retail book market in the longrun? d. If Baker and Taylor merged with Bookazine= what would the change in HE] be for the wholesale book market? [I Do you think the U.S . government would approve this merger? Explain