1Calculate The Herfindahl Index And The Four Firm

Question

1.Calculate the Herfindahl index and the four-firm concentration ratio for the following industry; Use the following figure to answer questions 2-4. ms Market Stare Price MC ATC 2. Is the firm in…

1.Calculate the Herfindahl index and the four-firm concentration ratio for the following industry; Use the following figure to answer questions 2-4. ms Market Stare Price MC ATC 2. Is the firm in the figure a natural monopoly? Explain your answer 3. Will the firm in the figure earn profits if it produces Q, and charges P? Explain your answer. 4. Which quantity in the figure is consistent with profit regulation? With price regulation? Explain your answers.

Solutions

Expert Solution

1) HHI= (17)^2 + (15)^2 + (14)^2 + (14)^2 +(12)^2 + (10)^2
+(9)^2 + (9)^2=1312

Four firm concentration ratio= (17+15+14+14)= 60%


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