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There are six companies in the industry. Assume their sales in the year 2006 are as follows:
Firm Sales (10 millions of dollars)A 100B 80C 50D 40E 40F 20
1. What is the concentration ratio in the industry(a) if you use the four-firm concentration ratio;(b) if you use the HHI index.
2. Would you regard this industry as oligopolistic? Why or why not?
3. Assume that firm A merges with firm F. What now will be the concentration ratio in the industry?
4. Assume that after they merge, firms A and F go out of business. What now will be the concentration ratio in this industry?
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