For the average total cost curve of a firm with economies of scale, what happens to costs as output increases?
(A) Costs go up.
(B) Costs go down.
(C) Costs initially go up and then go down.
(D) Costs initially go down and then go up.
Ans: (B) Costs go down.
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A deadweight loss
A) is possible only if the good is underproduced but is not possible if the good is overproduced. B) subtracts only from producer surplus. C) is a loss to consumers and a gain to producers. D) is a loss inflicted on the entire society.
If there are important spillover benefits from consumption of a good, a. government should prohibit its production
b. taxes should be imposed on producers of the product. c. the market demand curve for the good understates the value of the product to society and resources are therefore underallocated to its production. d. the market demand curve for the good overstates the value of the product to society and resources are therefore overallocated to its production.
Suppose four companies in an industry are considering a merger. Their market shares are: Company A 25%, Company B 16%, Company C 12%, and Company D 40%. Which of the following represents their score using the HHI method?
a. 93 b. 656 c. 1,600 d. 2,625
When someone takes out a mortgage loan to buy a house, the mortgage lender can take possession of the house and sell it if the borrower defaults on the loan because the house is being pledged as ________ for the loan
A) goodwill B) a liability C) insurance D) collateral