SOLVED

11) Consider an industry that is made up of nine firms each with a market share (percent of sales) as follows: a.Firm A: 30% b.Firm B: 20% c.Firms C, D and E: 10% each d.Firms F, G, H and J: 5% each A) 1700; moderately concentrated B) 1425; moderately concentrated C) 1600; moderately concentrated D) 2600; highly concentrated 12) A possible advantage of a horizontal merger for the economy is that A) the merging firms could avoid losses. B) the merged firm might reap economies of scale which could translate into lower prices. C) the degree of competition in the industry will be intensified. D) the government stands to collect more corporate income tax revenue. 13) The government estimated that by allowing the merger between AT&T and T-Mobile to go through, the Herfindahl Hirschman Index for the national market would increase from about 2,400 to about 3,100. According to the merger standards of the Department of Justice and the FTC, these index numbers indicate that the market is ________ concentrated, and the merger ________ be challenged. A) moderately; may B) moderately; will C) highly; may D) highly; will 14) The standards used by the Department of Justice and the FTC to evaluate a potential merger are based on market concentration as determined by the A) Herfindahl-Hirschman Index. B) Clayton Antitrust Act. C) Anti-Collusion Task Force. D) Robinson-Patman Act. 15) A merger between two competitors may be approved by the Department of Justice and the FTC if the two companies can substantiate ________ as a result of the merger. A) increases in revenue for the merged company B) an increase in the HHI to over 1,800 C) decreases in marginal revenue for the merged company D) increases in economic efficiency 16) Natural monopolies in the United States are generally regulated by A) the Federal Trade Commission. B) the Department of Justice. C) local or state regulatory commissions. D) the Department of Commerce. 17) If a natural monopoly regulatory commission sets a price where marginal cost is equal to demand A) the firm would earn monopoly profits. B) economic efficiency would not be achieved. C) the firm would incur a loss. D) the firm would break even. 18) Refer to Figure 10-9. Erickson Power is a natural monopoly because A) it is a power company and all power companies are natural monopolies. B) average total cost is still declining when it intersects demand. C) of its continually declining marginal revenue curve as output rises. D) its marginal cost lies entirely below its long-run average cost. 19) Refer to Figure 10-9. The firm would maximize profit by producing A) Q1 units. B) Q2 units. C) Q3 units. D) Q4 units. 20) Refer to Figure 10-9. The profit-maximizing price is A) P1. B) P2. C) P3. D) P4.