Question :
41) Suppose that an industry has an HHI of 1,900. : 1238872
41) Suppose that an industry has an HHI of 1,900. Two firms in the industry want to merge. Under which conditions will the Federal Trade Commission challenge the merger?
A) The market is considered competitive, so the merger will not be challenged.
B) The merger will be challenged if it raises the HHI by 100 or more points.
C) The merger will be challenged if it raises the HHI by 50 or more points.
D) The merger will be challenged if it raises the HHI by 200 or more points.
E) The merger will be challenged if it raises the HHI by 500 or more points.
42) In order for the Federal Trade Commission to consider an industry concentrated, the industry must have a Herfindahl-Hirschman Index of
A) less than 1,000.
B) between 1,000 and 1,400.
C) greater than 1,800.
D) less than zero.
E) between 1,400 and 1,800.
43) The Federal Trade Commission ________ the merger between AT&T and T-Mobile because the merger was projected to ________.
A) did not approve; increase the HHI by at least 700 points and reduce market competitiveness
B) approved; increase the HHI by only 700 points and not substantially affect market competitiveness
C) approved; decrease the HHI by almost 500 points
D) did not approve; increase the four-firm concentration ratio by 20 percent
E) did not approve; cause the firms to engage in predatory pricing
44) The first antitrust act was ________ passed in ________.
A) the Clayton Act; 1890
B) the Sherman Act; 1890
C) the Clinton Act; 1999
D) the Rockefeller Act; 1890
E) the Clayton Act; 1914
45) The Clayton Act
A) replaced the Sherman Act.
B) along with its amendments, outlawed several business practices if they substantially lessened competition or created monopoly.
C) along with its amendments, prohibited all business practices that substantially lessen competition or create monopoly.
D) was the first anti-trust law in the United States.
E) was repealed in 1985.
46) Which of the following is (are) prohibited if it substantially lessens competition or creates a monopoly?
i.price discrimination
ii.tying arrangements
iii.exclusive dealing
A) i only
B) ii only
C) ii and iii
D) iii only
E) i, ii, and iii
47) If Polka Cola agrees to sell its cola to a retailer only if the retailer also buys a lemon-lime drink, Polka Up, then Polka Cola is engaged in
A) a tying arrangement.
B) a requirement contracts.
C) an exclusive deal.
D) territorial confinement.
E) price discrimination.
48) Which of the following is always illegal?
A) possessing a very large market share
B) selling at a price below other producers because of efficiency
C) price fixing
D) attempting to merge with a competitor
E) price discrimination
49) Resale price maintenance
A) can lead to efficiency by preventing low-price shops from being free riders.
B) can lead to inefficiency by preventing low-price shops from being free riders.
C) is always legal.
D) is a clear example of predatory pricing.
E) is an example of a tying arrangement.
50) Predatory pricing occurs when a firm sets a ________ price to drive competitors out of business with the intention of then setting a ________ price.
A) monopoly; high
B) monopoly; low
C) low; monopoly
D) low; low
E) high; monopoly
51) In the case against Microsoft, it was claimed that combining Internet Explorer and Windows was
A) predatory pricing.
B) an illegal tying agreement.
C) creating one product that is convenient for the consumers.
D) illegal territorial confinement.
E) an inefficient resale maintenance agreement.
52) In a concentrated industry with a Herfindahl-Hirschman Index that exceeds 1,800, the Federal Trade Commission will challenge any merger that increases the Herfindahl-Hirschman index by a minimum of
A) 50 points.
B) 100 points.
C) 1,000 points.
D) 1,800 points.
E) 10,000 points.
18.5 Chapter Figures
The figure above shows the market for airplanes.
1) Suppose the airplane market is an oligopoly. If the firms act as a monopolist, the price will be ________ and if the firms act as competitors the price will be ________.
A) $13 million per plane; $1 million per plane
B) $1 million per plane; $13 million per plane
C) $13 million per plane; $13 million per plane
D) $1 million per plane; $1 million per plane
E) None of the above answers is correct.
2) Suppose the airplane market is an oligopoly. According to the figure above, if the firms act as a monopolist, the quantity produced will be ________ planes per week, and if the firms act as competitors, the quantity produced will be ________ planes per week.
A) 6; 12
B) 12; 6
C) 0; 6
D) 12; 0
E) None of the above answers is correct.
3) Suppose the airplane market is an oligopoly. According to the figure above, the price can range as high as ________ and as low as ________.
A) $13 million per plane; $1 million per plane
B) $30 million per plane; $13 million per plane
C) $13 million per plane; $13 million per plane
D) $1 million per plane; $1 million per plane
E) None of the above answers is correct.
4) Suppose the airplane market is an oligopoly. According to the figure above, the quantity produced can range as high as ________ planes per week and as low as ________ planes per week.
A) 10; 4
B) 12; 6
C) 6; 0
D) 12; 0
E) None of the above answers is correct.
