Suppose that an industry has a Herfindahl-Hirschman index of 2,000 . Two firms have proposed a merger. Firm A has a current market share of 9 percent. Firm B has a market share of 5 percent
Will the Justice Department challenge the merger? Explain.
The merger will raise the Herfindahl-Hirschman index by 90 points [(142) - (92) - (52)]. Since the industry is concentrated, the Justice Department will challenge any merger that increases the index by more than 50 points. Therefore, the merger will be challenged.
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In the circular flow model of the market system, business firms
A. buy products and resources. B. buy products and sell resources. C. sell products and resources. D. sell products and buy resources.
The effective rate of protection is a weighted average of nominal tariffs and tariffs on imported inputs
It has been noted that in most industrialized countries, the nominal tariffs on raw materials or intermediate components or products are lower than on final-stage products meant for final markets. Why would countries design their tariff structures in this manner? Who tends to be helped, and who is harmed by this cascading tariff structure?
If there is a decline in the price of milk, an input in the production of ice cream, then there will be a(n)
A) decrease in the supply of ice cream and a leftward shift of the supply curve. B) decrease in the quantity of ice cream supplied and a movement up along the supply curve. C) increase in the supply of ice cream and a rightward shift of the supply curve. D) increase in the quantity of ice cream supplied and a movement down along the supply curve.
To correct for market failure, the government could impose a tax on the producer
Indicate whether the statement is true or false