The Economy Tomorrow According to the In the News below, IN THE NEWS Joe Camel Acquires Newport In a widely anticipated moye. Reynolds American. producer of bestselling brand Camel. announced yesterday that it has agreed to buy Lorillard. maker of Newport. the number '1 menthol cigarette. The $25 billion deal will combine the number 2 and number 3 cigarette manufacturers. The new company. retaining the Reynolds American name. will have 35 percent of the US. market. running second to Altria's 4? percent share. As part ofthe deal. Imperial Tobacco will purchase several of Lorillards brands. including Eilu. its popular ecigarette. and end up with 10 percent of the market. Liggett 1|.i'ector will keep 4 percent of the market. Prior to merging. Reynolds had 25 percent of the market and Lorillard had 12 percent. with Imperial at 8 percent. Reynolds expects to cut annual costs by $3M million through eliminating oyerlap in sales. production. and overhead costs. Consumers worry that reduced competition will raise cigarette prices and further limit choices. The deal must win antitmst approyal before it is nalized. Source: News reporls. July 15-13. 2014. What were the values of: Instructions: Enter your responses as a whole number. a. The concentration ratio in the cigarette industry [i]: Prior to the merger? percent [ii] After the merger? |:| percent to. The maximum value of the Herndahl-Hirshman Index? b. The maximum value of the Herfindahl-Hirshman Index? (i) Prior to the merger? (ii) After the merger? c. Which measure best reflects the increased market power? Herfindahl-Hirshman Index v