In a perfectly balanced oligopoly (with eight firms, all having the same market share), if any one firm captures 1 percent of the market from one of the others,
a. c and d
b. the eight-firm concentration ratio will increase
c. the eight-firm concentration ratio will decrease
d. the Herfindahl-Hirschman index will rise
e. the Herfindahl-Hirschman index will fall
D
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A social loss function is a way to
a. represent the objectives of policymakers. b. balance the benefits lower inflation with the costs of higher unemployment and lower output. c. calculate the costs of budget deficits. d. a way to compensate the losers that result from changes in government policy. e. both a and b.
Which of the following is the best example of a supply shock?
a. an increase in the availability of capital and machinery due to normal changes in business investment b. a decrease in the productivity of the labor force due to a decline in the average educational level of workers c. a decline in agricultural output due to a summer drought d. an increase in output as a result of an expansion in employment
Which of the following effects results from the change in the interest rate created by an increase in government spending?
a. the investment accelerator and crowding out b. the investment accelerator but not crowding out c. crowding out but not the investment accelerator d. neither crowding out nor the investment accelerator
A positive temporary supply side shock will:
A. increase the level of potential output in the long run. B. decrease the price level in the long run. C. increase the price level in the long run. D. have no effect in the long run.