econ 107 ps2a

econ 107 ps2a - Economics 107 Solutions to Practice...

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Economics 107 – Solutions to Practice Problems for Chapter 6 1 1. The advantage is that some monopolized industries will have a more competitive environment afterwards. The disadvantage is that if firms have large market share not because of market power but because they are more efficient (say due to economies of scale) or more innovative, breaking them up will hurt economic efficiency. 2a. Q L = 25,000; Q F = 71,000; P = 1.375 2b. Q L = 45,000; Q F = 75,000; P = 1.875 3a. Four-firm concentration ratio = 62 3b. HHI = 1366 3c. Before the merger, ... 2 2 2 2 2 2 2 g f e d c b a HHI pre When the fifth and sixth largest firms merge, their market shares are added together. After the merger, ... ) ( 2 2 2 2 2 2 g f e d c b a HHI post ... ) 2 ( 2 2 2 2 2 2 2 g f ef e d c b a HHI post ... 2 2 2 2 2 2 2 2 g f e d c b a ef HHI post pre post HHI ef HHI
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This note was uploaded on 04/14/2010 for the course ECON econ 107 taught by Professor Peters during the Winter '09 term at UCSD.

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