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Question One (1) Green Energy, Inc. is a monopoly subject to high barriers to entry. Its marginal cost is $90 and average cost is $120.

Question One (1)Green Energy, Inc. is a monopoly subject to high barriers to entry. Its marginal cost is $90 and average cost is $120. A recent market study has determined that the price elasticity of demand is 1.25. Determine the price that the company is most likely to set.

Question Two (2)The demand and supply curves in a perfectly competitive market are given by (for ) and (for ), respectively. A representative firm's cost is captured with the following equations:

  1. Determine the equilibrium price and quantity in the market.
  2. Given the cost functions of the representative firm, find the profit-maximizing level of production (quantity), total revenue, total cost, and profit for the firm in equilibrium.
  3. Given the cost functions of the representative firm, determine the minimum price required for a new firm to enter the market.

Question Three (3)An analyst gathers the following market share data for an industry:

Company

Sales (in millions)

XYA

500

XYB

400

XYC

350

XYD

120

XYE

90

All others

80

Determine the industry's four-company concentration ratio.Question Four (4)An analyst gathers the following market share data for an industry:

Company

Market Share (%)

ABV

40

ABW

30

ABX

15

ABY

7

ABZ

8

Determine the industry's three-firm Herfindahl-Hirschman index.

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