Author Question: Suppose there are ten firms that occupy the Odell, Oregon cherry pie market. The market share of ... (Read 100 times)

jasdeep_brar · **on:** Jun 29, 2018

Suppose there are ten firms that occupy the Odell, Oregon cherry pie market. The market share of each firm is listed in the above table.

a) What is the four-firm concentration ratio in this market?
b) What is the Herfindahl-Hirschman Index for this market?
c) If Firm H and Firm A merge, what is the new Herfindahl-Hirschman Index for this market?
d) A severe winter causes every firm except A, B, and E to close. With only these three firms operating, Firm A's market share is 71 percent, Firm B's market share is 23 percent, and Firm C's market share is 6 percent. What is the Herfindahl-Hirschman Index for this market now?

Question 2

If the government assigns private property rights to a common resource, then the

A) resource is under-utilized.
B) marginal private cost becomes equal to the marginal social cost.
C) government needs to set a quota to achieve efficiency.
D) None of the above answers is correct.

Sophiapenny · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

a) The four-firm concentration rate is 74 percent.
b) The Herfindahl-Hirschman Index is 1,782.
c) Once firms H and A merge, the new Herfindahl-Hirschman Index is 2,038.
d) The Herfindahl-Hirschman Index is now 5,606.

Answer to Question 2

B