Managerial Economics
Instructions: This assignment requires a combination of short paragraph answers and computations. You are required to follow proper APA format. Read the Criteria section below for more information before you begin this assignment.
 
How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain.
 
How does “ease of entry” for a monopoly differ from that for a perfectly competitive firm? How does this difference impact efficiency under each market structure? Explain.
 
The following table provides market share information about the soft-drink industry. Review antitrust laws and the merger guidelines under Chapter 15: “Monopoly and Antitrust Policy” and conduct your own research on U.S. antitrust laws in the PG Library or on the Internet to answer the following questions.
 
Company
Market Share
Coca-Cola
35%
 
Pepsi-Co
 
30%
 
Cadbury Schweppes
 
25%
 
Other
 
10%
 
Compute the Herfindahl–Hirschman Index (HHI) market concentration rules that guide mergers between companies to prevent monopoly creation and to promote competition among firms.
 
Based on the market shares of the companies in the table, the merger of which companies will be highly concentrated?
 
What ethical rules will be affected based on U.S. antitrust laws and merger guidelines in regard to a highly concentrated market?
 
Do you think the Department of Justice and the Federal Trade Commission would approve a merger between any two of the first three companies listed in the table based on U.S. merger guidelines and antitrust laws? Explain.
Do you think this market has barriers to entry? If yes, what might be the market barriers?