If a firm with a 10 percent market share merges with a firm with 15 percent of the market, by how much will the Herfindahl index change? The other firms have 40 percent, 15 percent, 10 percent, and 10 percent shares.
a. It rises by 100.
b. It rises by 300.
c. It falls by 200.
d. It falls by 250.
e. It rises by 25.
QUESTION 2To achieve allocative efficiency, firms
a. strive to minimize fixed costs
b. strive to maximize profits
c. produce at their minimum long-run average cost
d. produce at their minimum long-run marginal cost
e. produce the output consumers want most
QUESTION 3Which of the following is an example of a local monopoly as compared to a national or international monopoly?
a. a restaurant at a rural crossroads
b. Alcoa during the 19th century
c. De Beers Consolidated Mines
d. AT&T
e. U.S. Postal Service
QUESTION 4If a firm with a 20 percent market share merges with a firm with 5 percent of the market, by how much will the Herfindahl index change? The other firms have 40 percent, 15 percent, 10 percent, and 10 percent shares.
a. It rises by 100.
b. It rises by 200.
c. It falls by 100.
d. It falls by 200.
e. It rises by 25.
QUESTION 5A market is said to be allocatively efficient when the marginal cost of producing each good equals the marginal benefit that consumers derive from that good
a. True
b. False
QUESTION 6Consumer concern about blood diamonds, a diamond mined in a war zone and sold to finance an insurgency, invading army's war efforts, or a warlord's activity, may have caused a drop in De Beers sales.
a. True
b. False