The city of Dryden is served by three banks, which recently reported deposits of $250 million, $200 million, and $45 million, respectively. Calculate the Herfindahl index for the Dryden market area. If the second and third largest banks merge, what would the postmerger Herfindahl index be? Under the Department of Justice guidelines discussed in the chapter, would the Justice Department be likely to challenge this merger?
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