Consider a market characterized by a Herfindahl-Hirschman index of 5,000. One of the firms in this market has a Lerner index of 0.89 and is considering a horizontal merger with a competing firm. Based on this information, it is likely that the U.S. Department of Justice will:
A. reject the merger since the industry is highly concentrated, even though the firm proposing the merger has little market power.
B. reject the merger since the industry is highly concentrated and the firm proposing the merger has significant market power.
C. approve the merger since the industry is not concentrated and the firm proposing to merge has little market power.
D. None of the answers are correct.
Answer: B
You might also like to view...
There is a shortage of every good that is scarce
Indicate whether the statement is true or false
Let MP = marginal product, P = output price, and W = wage, then the equation that represents the condition where a competitive firm would hire another worker is
A) P × MP > W. B) P × MP = W. C) P × W > MP. D) P × MP < W.
The effect of a tariff or a quota is to
a. raise the price of a commodity in the exporting country above the price in an importing country. b. raise the price of a commodity in an importing country above the price in the exporting country. c. lower the price of the commodity in all countries. d. raise the price of the commodity in all countries.
Chain-weighted measures of real GDP make use of prices from:
A. an unchanging base year. B. a continuously changing base year. C. a base year that is changed approximately every 5 years. D. a base year that is changed approximately every 10 years.