Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger. The U.S. Justice Department concludes the merger will boost the index to 1,050. The antitrust authorities will most likely:
A. ignore this merger because of the relatively small size of, and increase in, the Herfindahl
index.
B. prevent the merger, contending that it violates the Clayton Act.
C. allow the merger if foreign entry to the industry is possible.
D. allow the merger but watch the new firm carefully for future violations of the antitrust laws.
Answer: A
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Refer to Table 4-3. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the market price of Marko's polo shirts is $30, Marko's will produce
A) 0 shirts. B) 1 shirt. C) 3 shirts. D) 4 shirts.
Suppose the market for autoworkers is initially in equilibrium, but then the demand for automobiles increases and simultaneously the automakers allow autoworkers less flexibility working at the plants. What happens in the market for autoworkers?
A) The equilibrium wage rate will increase and the equilibrium quantity of labor will increase, decrease or stay the same. B) The equilibrium wage rate will increase, decrease or stay the same and the equilibrium quantity of labor will increase. C) The equilibrium wage rate and the equilibrium quantity of labor will both decrease. D) The equilibrium wage rate will decrease and the equilibrium quantity of labor will increase.
If the aggregate demand curve shifts to the left in the short run then the long-run equilibrium will be at a:
A. lower price level and lower level of output. B. lower price level and same level of output. C. higher price level and lower level of output. D. higher price level and higher level of output.
Which of the following statements is true?
A. The national debt is the current year's amount by which the government is spending more than it collects as taxes. B. Deficits are financed by the government issuing for sale more government securities. C. The debt ceiling refers to the amount of debt at which the government is officially declared as being bankrupt. D. Internal national debt is the portion of the national debt owed to foreigners.