Calculation of Change in HHI Associated with a Merger Consider

question 114

Multiple Choice

Calculation of Change in HHI Associated with a Merger Consider a market that has three firms with the following market shares:
Firm A 15 percent
Firm B 25 percent
Firm C 60 percent
Suppose Firm B want to acquire Firm A so that the post-acquisition market would exhibit the following shares:
B + A = 40 percent
C = 60 percent
What is the change in the HHI resulting from the merger?

• A)750
• B)4450
• C)5200
• D)No change

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Definitions:

Indifference Curves

Graphical representations used in microeconomics to show combinations of two goods that provide the same level of utility to a consumer.

Preferences

Individual tastes or choices regarding various alternatives, shaped by factors like utility, satisfaction, and economic conditions.

Convex

A shape or function where a line segment joining any two points on its graph lies above or on the graph, often associated with optimization problems in economics.

Indifference Curve

A graph that shows different combinations of two goods between which a consumer is indifferent, reflecting equal levels of utility or satisfaction.