If there are only three firms in an industry with 50 percent, 40 percent, and 10 percent of the market, respectively, the Herfindahl Index is
a. 40
b. 100
c. 200
d. 33
e. 4,200
QUESTION 2If a market is such that, at the market equilibrium quantity, the benefit of the last unit produced just equals its marginal cost
a. it has earned a positive economic profit
b. it has achieved productive efficiency
c. it has achieved allocative efficiency
d. it has achieved economies of scale
e. there are further trades than can increase producer surplus
QUESTION 3United States Postal Service has successfully leveraged its monopoly power through
a. online postage purchases
b. delivery of Netflix DVDs
c. an online bill-paying service
d. a secure online document transmission service
e. increasing third-class mail rates
QUESTION 4According to current Justice Department guidelines, mergers in an industry are seldom challenged if the industry
a. would have a postmerger Herfindahl index greater than 1,800
b. would have a postmerger Herfindahl index less than 1,000
c. has a premerger Herfindahl index greater than 1,800
d. has a premerger Herfindahl index less than 1,000
e. has a premerger Herfindahl index equal to 10,000
QUESTION 5If a market is allocatively efficient,
a. firms are minimizing marginal cost
b. firms are minimizing total cost
c. consumers are minimizing expenditures
d. it must be impossible to increase total utility
e. it must be impossible to decrease output
QUESTION 6Because some monopolies could still earn an economic profit even if the firm is inefficient, corporate executives might waste resources by indulging in
a. long lunches
b. corporate jets
c. plush offices
d. None of the answers is correct.
e. All of the answers are correct.
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