Micro Economics Question

Learning Goal: I’m working on a micro economics question and need an explanation and answer to help me learn.

1. In the following market, is there likely to be an investigation by the US Department of Justice based on the HHI if firms C and D merge? Please show your calculations.
Market share
Firm A 40%
Firm B 30%
Firm C 10%
Firm D 10%
Firm E 10%

2. In the following matrix for the profits of two dry cleaners with the decision whether or not to offer discounts for regular customers. What do expect to happen? Why? Note: they cannot collude

You don’t offer discount You offer discount
Rival doesn’t offer discount Rival gets $2000

You get $2000

Rival gets $1000

You get $6000

Rival offers discount Rival gets $6000

You get $1000

Rival gets $5000

You get $5000

3. In the following mergers with a merger type and, for each, explain why

Types: Horizontal, vertical, conglomerate

1. Dell computers buys Intel maker of computer chips

2. JetBllue airlines buys Spirit airlines

3. Vons grocery buys Ralphs grocery

4. Starbucks buys car dealership

4. This is the final piece of work for the semester. Congratulations! In a one page (or longer) essay, I’d like you to think back about what you have learned. Please pick one concept (only one please) that was most important for your understanding of the economy. How did that concept change or broaden your understanding? How might you be able to use that concept in the future?

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