For computational problems, make sure to show your work and
explain your steps.****
For this problem use the Herfindahl Index to
compute market concentration:Suppose Apple has 45% of the U.S. market share
for smartphones, followed by Samsung with 30%, LG with 9%, Motorola with 8%,
HTC with 6%, and Nokia with 2%. What is
the Herfindahl Index for the smartphone industry based on these numbers? Based
on the Herfindahl Index, do you think the government would be willing to
approve a merger between Apple and Samsung?Now suppose Nokia and Motorola come out with a
new smartphone that takes away a huge chunk of market share from Apple and
Samsung. The new market shares are 25% for Apple, 20% for Samsung, 20% for
Motorola, 20% for Nokia, 10% for LG, and 5% for HTC.Use what you learned about perfect competition,
monopoly, and oligopoly to answer these questions:In the table below is the quantity produced, the
price, the fixed costs, and variable costs for a perfectly competitive firm
that faces a constant price of $150 for its product regardless of the quantity
it sells. Use the information in the
first four columns to calculate the number for the last four columns. At what quantity should they produce based on
what you find with your results? How do you think your answer might change if it
became a monopolist with all of its competitors leaving the market? Or if it became an oligopoly with only one or
two competitors?
Quantity
Price
Fixed Cost
Variable Cost
Total Cost
Marginal Cost
Total Revenue
Profit/Loss
0
150
200
1
150
200
$140
2
150
200
$240
3
150
200
$320
4
150
200
$410
5
150
200
$520
6
150
200
$650
7
150
200
$810
8
150
200
$1,010
9
150
200
$1,310
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