Merger guidelines developed by the U.S. Department of Justice and the Federal Trade Commission use the Herfindahl-Hirschman Index as a measure of concentration. This index measures concentration in an industry by
A) adding up the market shares of all firms in the industry, squaring this number and then dividing by the number of firms in the industry.
B) squaring the market shares of each firm in an industry and then adding up the values of the squares.
C) squaring the four-firm concentration ratio of the industry and dividing this number by the total number of firms in the industry.
D) determining the market shares of the four largest firms in the industry, but unlike the concentration ratio, the Index includes sales in the United States by foreign firms.
Answer: B
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
How does an increase in the price level lead to a higher interest rate?
What will be an ideal response?
An upward-sloping labor supply curve means that
a. workers prefer to buy more leisure time when their incomes increase. b. workers prefer to supply less labor when wages are high. c. an increase in the opportunity cost of leisure leads workers to increase the quantity of labor they supply. d. All of the above are correct.
The_____________is the principle that suppliers will normally offer more for sale at higher prices than lower prices.
Fill in the blank(s) with the appropriate word(s).