If the Herfindahl-Hirschman Index for an industry is 8,528, is the industry competitive or concentrated?
What will be an ideal response?
Ques. 2Suppose there are only two kind of cars in the market for used cars: lemons and good cars. A lemon is worth 1,000 both to its current owner and to anyone who buys it. A good car is worth 8,000 to its current and potential owners.
Buyers can't tell whether a car is a lemon until after they have bought the car, and there is no warranty. What is the prevailing price of a used car? A) 8,000
B) 1,000
C) 4,500
D) The prevailing price depends on how many lemons and how many good cars are traded.
Ques. 3If customer discrimination does not exist, firms that discriminate on the basis of race or sex will
A) have higher costs than those that do not.
B) have the same level of costs as those that do not.
C) have lower costs than those that do not.
D) tend to survive whereas firms that do not discriminate will tend to fail.
Ques. 4Consider the labor market depicted in the above figure. The competitive equilibrium would be for workers to be paid an hourly wage equal to
A) 10.
B) 15.
C) 20.
D) None of the above answers is correct.
Ques. 5If the ATC curve has a positive slope, then the MC curve must be
A) horizontal.
B) vertical.
C) above the ATC curve.
D) below the ATC curve.
Ques. 6When there are external costs of production, such as when electric utilities burn coal, a competitive market will produce an inefficient level of output.
Indicate whether the statement is true or false
Ques. 7Price discrimination
A) eliminates the producer surplus.
B) turns consumer surplus into producer surplus.
C) decreases output below the profit-maximizing level.
D) lowers a monopoly's economic profit.
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