Problems

38.

Use Table 11.5 to calculate the four-firm concentration ratio for the U.S. auto market. Does this indicate a concentrated market or not?

GM 19%
Ford 17%
Toyota 14%
Chrysler 11%
Table 11.5 Global Auto Manufacturers with Top Four U.S. Market Share, June 2013 (Zacks, 2013)
39.

Use Table 11.5 and Table 11.6 to calculate the Herfindal-Hirschman Index for the U.S. auto market. Would the FTC approve a merger between GM and Ford?

Honda 10%
Nissan 7%
Hyundai 5%
Kia 4%
Subaru 3%
Volkswagen 3%
Table 11.6 Global Auto Manufacturers with additional U.S. Market Share, June 2013 (Zacks, 2013)

Use Table 11.4 to answer the following questions.

40.

If the transit system was allowed to operate as an unregulated monopoly, what output would it supply and what price would it charge?

41.

If the transit system was regulated to operate with no subsidy—that is, at zero economic profit—what approximate output would it supply and what approximate price would it charge?

42.

If the transit system was 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?