TSD Inc. sells 500,000 bottles of its soft drinks per year. Each bottle has a variable cost of $0.25 and sells for $0.45. Fixed operating costs are $50,000. The firm also has current interest changes of $6,000 and preferred dividends of $2,400.

 Corporate taxes are at 25%. 

 Calculate the degree of operating leverage, financial leverage and total leverage. 

Calculate the Herfindahl index for a duopoly market where each firm has equal market share.

ii. Calculate the Herfindahl index for a three-firm oligopoly market in which one firm has a 80% market share and the other firms each have 10% market share.

iii. Calculate the Herfindahl index for a 10-firm oligopoly in which each firm has equalmarket shares.

iv. Which of the markets is the least competitive?   

Answer rating: 100% (QA)

To calculate the degree of operating leverage DOL we need to divide the percentage change in operating income by the percentage change in sales The formula for DOL is DOL Change in Operating Income Ch... View the full answer