An industry has five firms, each with a market share of 20 percent. There is no foreign competition, entry into the industry is difficult, and no firm is on the verge of bankruptcy. If two of the firms in the industry seek to merge, this action would most likely be opposed by the government because the Herfindahl index for the industry is:
A. 2000 and the merger would increase the index by 500
B. 2000 and the merger would increase the index by 800
C. 2500 and the merger would increase the index by 500
D. 2500 and the merger would increase the index by 1200
B. 2000 and the merger would increase the index by 800
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An outcome is considered efficient if
A) it is not possible to make someone better off without making anyone else worse off. B) it is the best available choice for an individual. C) it results in fair shares for everyone involved. D) it is possible to make someone better off without making anyone else worse off.
Minimum efficient scale is defined as the level of output at which
A) the firm's long-run average total cost starts falling. B) all economies of scale are exhausted. C) the maximum output is produced. D) diminishing returns affect average total cost.
The t-statistic is computed by
A) dividing the regression coefficient by the standard error of the estimate. B) dividing the regression coefficient by the standard error of the coefficient. C) dividing the standard error of the coefficient by the regression coefficient. D) dividing the R2 by the F-statistic.
What rule must be followed to obtain an efficient allocation of resources?
a. P = AC. b. P = MC. c. P = AR. d. MR = AC.