Refer to Table 25.2. Assume there are only four firms in the pool sweeper industry. The U.S. Justice Department would most likely
A) Allow a merger between North Star and Blue Lagoon.
B) Allow a merger between Hurricane and Blue Lagoon.
C) Allow a merger between Blue Lagoon and Clean Sweep.
D) Not allow any mergers among firms in this industry.

Question

Refer to Table 25.2. Assume there are only four firms in the pool sweeper industry. The U.S. Justice Department would most likely
A) Allow a merger between North Star and Blue Lagoon. 
B) Allow a merger between Hurricane and Blue Lagoon. 
C) Allow a merger between Blue Lagoon and Clean Sweep. 
D) Not allow any mergers among firms in this industry.

Quizplus · Accepted Answer

According to Table 25.2, the four-firm concentration ratio for the pool sweeper industry is 70%, which indicates a highly concentrated market. The Justice Department would be unlikely to allow any further mergers among the firms in this industry to prevent monopolistic behavior and maintain competition.