International Economic Exam Paper
UNIVERSITY OF LONDON MSc EXAMINATION 2011
For Internal Students of Royal Holloway
DO NOT TURN OVER UNTIL TOLD TO BEGIN
MN5118 : INTERNATIONAL BUSINESS ECONOMICS MN5118R : INTERNATIONAL BUSINESS ECONOMICS - PAPER FOR RESIT
Time Allowed: THREE hours Answer THREE questions
No credit will be given for attempting any further questions.
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MN5118 / MN5118R
c) What compensation package would you recommend for your firm? (3 marks) d) Some expert suggests that performance pay is not useful in the context of team production. Why is that? (5 marks) TOTAL: 25 MARKS Question 4. The pizza market is divided as follows: Restaurant Pizza Hut Domino’s Little Caesars Pizza Inn Round Table All others (less than 1% of the market each) a) How would you describe its market structure? b) What is the four-firm concentration ratio? c) What is the Herfindahl index? d) What is the numbers-equivalent of firms? What does it mean?
Market share 20.7 % 17.0 % 6.7 % 2.2 % 2.0 % 51.4 %
(3 marks) (3 marks) (3 marks) (3 marks)
e) Pizza Inn is hoping to acquire Round Table. The Competition Authority is examining their application. Recalculate the 4-firm concentration ratio, the Herfindahl index and the numbers-equivalent of firms after the proposed merger takes place. (6 marks) f) What do you think the Competition Authority will recommend? Explain your answer. (3 marks) g) Critically assess the Herfindahl Index and