Social Dynamo Corporation earned profits last year of $49 million on salesof $500 million. During the same period, its major competitor—EIOCorp.—enjoyed sales of $490 million and earned profits of $52 million.Currently, Social Dynamo is negotiating a deal in which it would acquire theassets of EIO in a transaction Wall Street values at $120 million. A successfulmerger between the two companies is expected to raise prices in the market542Managerial Economics and Business Strategy14.15.16.17.18.by 2 percent. Is Social Dynamo obligated to notify the U.S. Justice Depart-ment and the Federal Trade Commission of its merger intentions? Explain.A well-known conglomerate that manufactures a multitude of noncompetingconsumer products instituted a corporatewide initiative to encourage themanagers of its many divisions to share consumer demographic information.However, since the initiative was implemented, the CEO has noticed that lessinformation is available than ever. Why do you think the CEO’s plan backfired?You are the manager of a paper mill and have been subpoenaed to appearbefore a joint session of the Senate Consumer Affairs and the Senate Environ-mental subcommittees. The Consumer Affairs Subcommittee is interested inyour testimony about the pricing practices of your company because a recentnews magazine reported that your markups are 250 percent. The Environmen-tal Subcommittee is interested in exploring ways to reduce the pollution asso-ciated with your paper mill. In particular, you know that one senator on theEnvironmental Subcommittee will ask you to justify why the firm should notbe charged a per-unit tax on the firm’s output to compensate for the pollutionit discharges into a major river. Devise a game plan for responding to thequestions that will be raised in the joint session of the subcommittees.