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Problem 36

Use Table 11.5 and Table 11.6 to calculate the He…

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Problem 36

Use Table 11.5 and Table 11.6 to calculate the Herfindal-Hirschman Index for the U.S. auto market.
Would the FTC approve a merger between GM and Ford?
Problem 37

If the transit system were allowed to operate as an unregulated monopoly, what output would it supply and what price would it charge?
Problem 38

If the transit system were regulated to operate with no subsidy (i.e., at zero economic profit), what
approximate output would it supply and what approximate price would it charge?
Problem 39

If the transit system were regulated to provide the most allocatively efficient quantity of output, what
output would it supply and what price would it charge? What subsidy would be necessary to insure this efficient provision of transit services?
Daniel C.
Problem 1 Problem 2 Problem 3 Problem 4 Problem 5 Problem 6 Problem 7 Problem 8 Problem 9 Problem 10 Problem 11 Problem 12 Problem 13 Problem 14 Problem 15 Problem 16 Problem 17 Problem 18 Problem 19 Problem 20 Problem 21 Problem 22 Problem 23 Problem 24 Problem 25 Problem 26 Problem 27 Problem 28 Problem 29 Problem 30 Problem 31 Problem 32 Problem 33 Problem 34 Problem 35 Problem 36 Problem 37 Problem 38 Problem 39
Problem 35

Use Table 11.5 to calculate the four-firm concentration ratio for the U.S. auto market. Does this indicate a concentrated market or not?

Answer

There are certain ratios and indexes which are used by economists to measure the
competitiveness of an industry like four-firm ratio, HHI, etc. Antitrust laws are the laws and
regulations that are imposed by government or authorities to ensure the increased
competitiveness in the market.
The four-firm concentration ratio helps know the market dominance of top firms in the industry by
adding up the market share of top four market share holding firms in the industry.
Calculate the four-firm concentration ratio as follows:
$=19+17+14+11$
$=61 \%$
Thus, the four-firm concentration ratio is 61$\%$
As, the four-firm concentration value shows that these four firm covers more than 60$\%$ market so
it is a concentrated market.

Chapter 11
Monopoly and Antitrust Policy
Principles of Microeconomics for AP® Courses 2e

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Video Transcript

Okay, let's calculate the four firm concentration ratio for the U. S. Auto market. Here we have the top for firms you know we have to do is add up the American shares. So the student nine per 7 16 was for his 20. This one is 21 21 234 56 61 Brooks. So the four firm concentration ratio for the U. S. Auto market is 61. It's a concentrated right there. Or not. Um, yes, this is higher than you would like, right? For firms Thing of own 61% of the market. So I would say this relatively high. It's not too high. Well, just definitely. It might raise some eyebrows if two of these firms were too propose a merger.

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