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An industry consists of three firms with sales of $225,000, $45,000, and $315,000. a. Calculate the Herfindahl-Hirschman index (HHI). Instruction: Enter your response rounded to the nearest integer. b. Calculate the four-firm concentration ratio (C4). c. Based on the FTC and DOJ Horizontal Merger Guidelines described in the text, is the Department of Justice likely to attempt to block a horizontal merger between two firms with sales of $225,000 and $315,000

Answer :

Anthougogo

a) The Herfindahl-Hirschman index (HHI) for this industry of three firms with sales of $225,000, $45,000, and $315,000 is 0.

b) To calculate the four-firm concentration ratio (C4), we need information about the four largest firms in the market.  This information is not indicated.

However, the sales of the four largest firms are compared to the industry total sales to determine the four-firm concentration ratio.

c). Based on the FTC and DOJ Horizontal Merger Guidelines, the Department of Justice is most likely to block a horizontal merger between two firms with sales of $225,000 and $315,000 because they would create a monopoly with 92% market share.

What is the Herfindahl-hirschman Index (HHI)?

The HH index is a measure of market concentration.  It is computed by squaring the market shares of the major four firms, and then adding the squares.

Data and Calculations:

                 Sales          Market Share    Market Share Squared  

Firm A = $225,000     38.5%                  0.148225

         ($225,000/$585,000 x 100)

Firm B = $45,000       7.69%                  0.005914

         ($45,000/$585,000 x 100)

Firm C = $315,000     53.85%                0.289982

           ($315,000/$585,000 x 100)

Total    $585,000      100%                   0.444        

Learn more about the Herfindahl-Hirschman index (HHI) at https://brainly.com/question/7202572

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