The Department of Justice has challenged the merger of two firms, and the case has ended up in the Supreme Court. The two firms argue that they will not use their monopoly power to raise prices or to cut output. Under what judicial standard would their merger be allowed, and under what judicial standard would their merger be disallowed?
What will be an ideal response?
The merger would be allowed under the rule of reason, which says that a long as a firm behaves reasonably, its size does not matter. The merger would be disallowed under the per se standard, which says that having a monopoly position is undesirable, no matter how the firm behaves.
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Figure 7-6
Which of the lines in Figure 7-6 represents a typical average fixed cost curve?
A. 1 B. 2 C. 3 D. 4
Which of the following is not counted as income when the official poverty rate is calculated?
a. Medicaid benefits. b. dividends derived from the ownership of stock. c. earnings derived from a part-time job. d. money income derived from transfer payments.
In the money market, an increase in money supply will: a. increase the demand for money at each interest rate
b. decrease the demand for money at each interest rate. c. encourage people to exchange money for interest-bearing assets. d. encourage people to exchange interest-bearing assets for money. e. increase the interest rate.
The transformation of a Lorenz curve into a numerical value is
a. the value of the diagonal minus the value of the two sides of the right angle triangle b. the sum of the percentages of income for all groups c. the Lorenz coefficient d. the Gini coefficient e. the value of the midpoint on the Lorenz curve