If the Herfindahl-Hirschman index (HHI) among the firms in the long distance telecommunications market were equal to 1755, when would the Federal Trade Commission probably challenge a proposed merger between any two of the firms?
A) It would challenge if the HHI would increase by more than 50 points.
B) It would challenge if the HHI would increase by more than 100 points.
C) It would challenge no matter what happened to the HHI because the market has so few firms.
D) It would not challenge because the HHI is less than 1800.
Ques. 2The output at which average variable cost is a minimum is ________ than the output at which ________ is a minimum.
A) the same as; average total cost
B) the same as; marginal cost
C) less than; average total cost
D) less than; marginal cost
Ques. 3The government can aid in reducing pollution by using a policy of cap-and-trade, which means that
A) polluters are taxed on the amount of pollution they discharge.
B) emission charges are established by the government.
C) each polluter is assigned a pollution limit and is given tradable permits that allow this amount of pollution.
D) only some producers pollute and the others go out of business.
Ques. 4If a union is able to decrease the supply of workers in a competitive labor market but the union cannot affect the demand for its members' labor, then
A) wages and the quantity of labor hired will both increase.
B) wages will increase but the quantity of labor hired will decrease.
C) wages will decrease but the quantity of labor hired will increase.
D) wages and the quantity of labor hired will both decrease.
Ques. 5Can both producer surplus and consumer surplus exist at the same time in a particular market?
What will be an ideal response?
Ques. 6Redbox rents DVDs for 1 per day via self-service kiosks located across the United States. In 2007, each kiosk averaged about 50 rentals per day. Suppose Redbox increases their daily price to 1.50.
What is the price elasticity of demand if rentals decrease by 20 per day? A) 1.25
B) 1.33
C) 1
D) 0.8
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