# ECO – Common Economic industry measures

Calculate each of the common economic industry measures below.a. In Roswell, New Mexico, the retail gasoline market consists of eight firms. Firm 1 has 40 percent of the market, Firm 2 has 30 percent, and the remaining firms have 5 percent each. What is the four-firm concentration ratio for this industry?b. The mallet industry is comprised of six firms of varying sizes. Firm 1 has 35 percent of the market. Firm 2 has 25 percent, and the remaining firms have 10 percent each. What is the Herfindahl-Hirschman index for the widget industry? Based on the U.S. Department of Justice merger guidelines described in the text, do you think the Justice Department would be likely to block a merger between firms 5 and 6?c. Levitt Inc. operates in an industry that has a Rothschild index of 0.78. The firm gained access to a government report that revealed the own-price elasticity of market demand within the industry to be -2.6. Use this information to obtain an estimate of the own-price elasticity of demand for the product produced by the firm.d. Elliot Industries has a rather unique product that sells for \$25 per unit, and the marginal cost is \$11.25. Determine the Lerner index for the firm. Does this index indicate market power?

# ECO – Common Economic industry measures

Calculate each of the common economic industry measures below.a. In Roswell, New Mexico, the retail gasoline market consists of eight firms. Firm 1 has 40 percent of the market, Firm 2 has 30 percent, and the remaining firms have 5 percent each. What is the four-firm concentration ratio for this industry?b. The mallet industry is comprised of six firms of varying sizes. Firm 1 has 35 percent of the market. Firm 2 has 25 percent, and the remaining firms have 10 percent each. What is the Herfindahl-Hirschman index for the widget industry? Based on the U.S. Department of Justice merger guidelines described in the text, do you think the Justice Department would be likely to block a merger between firms 5 and 6?c. Levitt Inc. operates in an industry that has a Rothschild index of 0.78. The firm gained access to a government report that revealed the own-price elasticity of market demand within the industry to be -2.6. Use this information to obtain an estimate of the own-price elasticity of demand for the product produced by the firm.d. Elliot Industries has a rather unique product that sells for \$25 per unit, and the marginal cost is \$11.25. Determine the Lerner index for the firm. Does this index indicate market power?