The In the News article "A Sirius Mistake? FCC Approves XM-Sirius Merger" discusses the proposed merger of two satellite radio companies. Antitrust officials will examine the merger in order to
A. Increase the profitability of monopolies.
B. Prevent the abuse of market power.
C. Prevent economies of scale.
D. Protect the government from frivolous lawsuits.
Answer: B
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Refer to Figure 3.1. Which of the following is true concerning Alvin's marginal rate of substitution?
A) It is diminishing. B) It is positive but varies along the indifference curve. C) It is constant. D) It is zero.
Other things being equal, the lower the value of elasticity:
A. the more likely the profitability of a price increase. B. the less likely the profitability of a price increase. C. the greater the responsiveness in quantity demanded to a price change. D. the lower the corresponding increase in firm revenue.
The quantity supplied of bagels is 100 at the unit price $1. Suppose the price elasticity of supply by the initial value method is 1.5, and you would like to induce sellers to increase the quantity of bagels supplied to 130. Then the new price for bagels must be:
A. $11. B. $10.20. C. $1.20. D. $1.10.
In a perfectly competitive market in which identical firms face the same horizontal marginal cost curve, if demand increases, then the amount of consumer surplus will
A. increase. B. become negative. C. decrease. D. become zero.