There are six companies in the industry. Assume their sales in the year 2006 are as follows:

Firm Sales (10 millions of dollars)
A 100
B 80
C 50
D 40
E 40
F 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?