Suppose an industry is composed of 10 firms. Each firm's share of total sales in the industry is 10 percent. If two of the firms merge, then the four-firm concentration ratio in the industry will
A) remain unchanged.
B) decrease as there are fewer firms in the industry.
C) increase.
D) depend on the market condition faced by the industry.
Ques. 2Which of the following statements regarding economic regulation is TRUE?
A) Economic regulation has failed by insisting that firms must be allowed to earn a normal rate of return.
B) Rate-of-return regulation has been much more effective than cost-of-service regulation.
C) Economic regulation deals only with rates of return, and not with prices.
D) Economic regulation deals mainly with prices firms charge, but firms can alter their return by altering quality of service, effectively raising the price per constant-quality-unit.
Ques. 3In the long run, the number of firms in an industry may change. If the number of firms increases, then
A) the supply curve will shift outward to the right.
B) the demand curve will shift outward to the right.
C) the supply curve will shift inward to the left.
D) the demand curve will shift inward to the left.
Ques. 4A relationship between two variables in which one variable increases at the same time as the other decreases is called
A) nonlinear.
B) constant.
C) inverse.
D) direct.
Ques. 5Foreign direct investment is
A) the purchase of less than 10 percent of the shares of ownership in a company in another country.
B) the purchase of more than 10 percent of the shares of ownership in a company in another country.
C) the diversification of purchasing shares in many companies in one country so that risk is kept to a minimum.
D) the diversification of purchasing shares in one company in many countries so that risk is kept to a minimum.
Ques. 6In the above figure, if we begin at S2 and the Fed buys bonds
A) the price of bonds falls, and the interest rate rises.
B) the price of bonds falls, and so does the interest rate.
C) the price of bonds rises, and so does the interest rate.
D) the price of bonds rises, and the interest rate falls.
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