Vertical merger occurs when
A) two firms merge where one had sold its output to the other as an input.
B) the merger moves the combined firm onto the horizontal portion of its long-run average cost curve.
C) two firms merge where each is about the same size.
D) two firms producing a similar product merge.
Answer: A
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Which of the following should help reduce the adverse selection problem?
A) the employer mandate provision of the Affordable Care Act B) the individual mandate provision of the Affordable Care Act C) keeping high-risk and low-risk individuals in the same health insurance pool D) all of the above
The above figure shows the market for a particular good. If the market is controlled by a perfect-price-discriminating monopoly, producer surplus equals
A) A + B + C + D + E. B) D + E. C) E. D) zero.
Government imposed price controls often lead to
A) illegal trades of the good. B) the most efficient use of resources. C) the equilibrium solution in terms of price and quantity. D) maximization of profits.
Classical growth theory predicts
A) a slowdown in population growth over time. B) sustained increases in economic growth in the long run. C) sustained increases in the standard of living in the long run. D) real GDP per person will remain at the subsistence level over time. E) the population growth rate slows as real GDP per person rises.