Problem 1) The table below shows the market shares of grocery store chains in the Detroit area. Use this information to answer the questions below.
|
|
2002
|
2005
|
|
Farmer Jack
|
25.5%
|
24.8%
|
|
Kroger
|
23.3
|
22.2
|
|
Meijer
|
16.1
|
18.7
|
|
Kmart
|
3.7
|
2.4
|
|
Busch's
|
0.9
|
1.3
|
|
Hillers
|
1.1
|
1.9
|
|
Trader Joe's
|
---
|
0.2
|
|
Whole Foods
|
0.7
|
0.5
|
|
Wal-Mart
|
---
|
1.1
|
a. Calculate the Herfindahl Index for 2002 and 2005 from this data.
b. Has the grocery store market become more concentrated, less Concentrated or unchanged in 2005 compared to 2002. Explain.
c. How would you characterize this market – as an oligopoly or monopolistic Competition? Why?
Problem 2) Use the following table to answer the questions below.
|
Output
|
Marginal Private
Benefit
(Demand)
|
Marginal Private
Cost
(Supply)
|
Marginal
Social
Cost
|
|
0
|
$ 0
|
$ 0
|
$ 0
|
|
1
|
10
|
2
|
4
|
|
2
|
9
|
3
|
5
|
|
3
|
8
|
4
|
6
|
|
4
|
7
|
5
|
7
|
|
5
|
6
|
6
|
8
|
|
6
|
5
|
7
|
9
|
|
7
|
4
|
8
|
10
|
|
8
|
3
|
9
|
11
|
|
9
|
2
|
10
|
12
|
|
10
|
1
|
11
|
13
|
a. Graph these three curves.
b. What will the equilibrium price and quantity be assuming there is no regulation of this business?
c. What will the equilibrium price and quantity be assuming all costs are included?