PROBLEMS

  1. Use Table 10.5 to calculate the four-firm concentration ratio for the U.S. auto market. Does this indicate a concentrated market or not?
Table 10.5 Global Auto Manufacturers with Top Four U.S. Market Share, 2018 (Source: https://www.statista.com/statistics/249375/us-market-share-of-selected-automobile-manufacturers/)

GM

17%

Ford

14%

Toyota

14%

Chrysler

13%
    1. Use Table 10.5 and Table 10.6 to calculate the Herfindal-Hirschman Index for the U.S. auto market. Would the FTC approve a merger between GM and Ford?
Table 10.6 Global Auto Manufacturers with additional U.S. Market Share, 2018 (Source: https://www.statista.com/statistics/249375/us-market-share-of-selected-automobile-manufacturers/)

Honda

9%

Nissan

9%

Hyundai/Kia

7%

Subaru

4%

Volkswagen

4%

BMW

2%
  1. Use Table 10.3 to answer the following question: If the transit system were allowed to operate as an unregulated monopoly, what output would it supply and what price would it charge?
  2. Use Table 10.3 to answer the following question: 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?
  3. Use Table 10.3 to answer the following question: 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?

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UH Microeconomics 2019 Copyright © by Terianne Brown; Cynthia Foreman; Thomas Scheiding; and Openstax is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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