List appropriate criteria for deciding whether a merger of two firms producing similar products should be permitted
Mergers that take place between two firms producing similar products reduce competition insofar as one firm disappears. However, if there are economies of scale, one large firm will have lower costs than two smaller firms. (Other possible advantages are learning from each other and risk reduction.) Economies of scale favor horizontal mergers, while the reduction in the number of firms gives pause to allowing a merger.
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Which of the following would cause the investment demand curve to shift?
a. Animal spirits (expectations). b. Technological change. c. Change in business taxes. d. All of these.
One key difference between swaps and option contracts is:
A. options trade on organized exchanges and swaps do not. B. options transfer risk, swaps create risk. C. swaps are derivative agreements and options are not. D. swaps do not involve any risk and options do.
If the reserve ratio is 15 percent and commercial bankers decide to hold additional excess reserves equal to 5 percent of any newly acquired checkable deposits, then the relevant monetary multiplier for the banking system will be:
A. 4. B. 3½. C. 10. D. 5.
In the long run, what level of economic profits can a monopolistic competitor expect to receive?
A) positive B) zero C) negative D) either negative or positive, depending on the demand for its product and its costs