Horizontal merger occurs when
A. two firms merge where each is about the same size.
B. two firms merge where one had sold its output to the other as an input.
C. the merger moves the combined firm onto the horizontal portion of its long-run average cost curve.
D. two firms producing a similar product merge.
Answer: D
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The short-run break-even price is the point at which
A) price is less than marginal cost. B) marginal cost, average total cost and marginal revenue are all equal. C) average variable cost is at a minimum. D) marginal cost, price and average variable cost are all equal.
"Preannounced, stable policies to achieve a low and constant money supply growth and a balanced federal budget are therefore the best way to lower the inflation rate." This statement best illustrates the:
a. Keynesian theory. b. rational expectations theory. c. incomes policy. d. supply-side theory.
The equimarginal principle illustrates:
a. that consumers are essentially robots. b. that people behave irrationally. c. that people behave in rather consistent ways in order to maximize happiness. d. that people behave in rather inconsistent ways. e. that people will spend all their incomes.
Suppose that an MBA degree creates no externality because the benefits of an MBA are internalized by the student in the form of higher wages. If there are no government subsidies for MBAs, then which of the following statements is correct?
a. The equilibrium quantity of MBAs will equal the socially optimal quantity of MBAs. b. The equilibrium quantity of MBAs will be greater than the socially optimal quantity of MBAs. c. The equilibrium quantity of MBAs will be less than the socially optimal quantity of MBAs. d. There is not enough information to answer the question.