Mergers harm society
A) True. Firms merge to avoid antitrust laws and increase their prices.
B) Maybe. It depends on whether the effect on prices is larger from reducing competition or increasing efficiency.
C) False. Firms gain economies of scale and pass the price savings on to their customers.
D) True. Total surplus is reduced when firms merge.
B
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The above table shows the total product schedule for Hair Today, a hair styling salon. The average product when four workers are hired is
A) 10 hair stylings. B) 15 hair stylings. C) 20 hair stylings. D) 240 hair stylings. E) the same as when five workers are hired.
Refer to the indifference curve in Figure 3.3. Which of the following statements is correct?
A) This individual receives no satisfaction from Good A. B) This individual receives no satisfaction from Good B. C) This individual will only consume A and B in fixed proportions. D) none of the above
Which of the following is true of firms in both monopolistic competition and perfect competition?
a. Firms face a horizontal demand curve. b. Price exceeds marginal revenue. c. Firms can enter and leave the industry with relative ease. d. Price exceeds marginal cost. e. Products are differentiated.
Which of the following is NOT an example of an externality?
A. The neighbor's wind chimes interfere with your sleep. B. A firm lays off 100 workers. C. Cancer-causing chemicals are dumped into the drinking water supply of a city. D. A cookie company emits a wonderful aroma in the air that makes people smile.