1. Consider two industries about which you have been given the following information:

Industry	Herfindahl index value	Four-firm concentration ratio
A	7500	80
B	1000	20

• Interpreter the values of four-frim concentration ratio and Herfindahl index in each industry.

• Which of the two industries is populated by a few large firms?

• Which by a larger number of firms?

• In which industry some of implicit collusion may occur? Why?

1. A) What does it mean to say that a monopolist is price discriminating?

B) What are the two keys that enable a monopolist to successfully price discriminate?

1. If monopolists meets the keys from above, and market quantity demanded at a price of $10 is 2000 and the quantity demanded at a price of $8 is 2400, then monopolist would earn higher profit by:

• Charging all consumers the price of $10 and selling 2000 units.

• Charging all consumers $8 in order to increase quantity sold to 2400.

• Selling 2000 units for $8 each, then selling an additional 400 units for $10 each.

• Selling 2000 units for $10 each, then selling an additional 400 units for $8 each