Question 1

A student figured out that the HHI for an industry was 15,000.What is the proper conclusion?

Accepted Answer

A)  The market is monopolistic. 
B)  The market is close to perfectly competitive or monopolistically competitive. 
C)  The student made some computational errors. 
D)  There is free entry in the market. 
A)  The market is monopolistic. 
B)  The market is close to perfectly competitive or monopolistically competitive. 
C)  The student made some computational errors. 
D)  There is free entry in the market.

Question 2

Which of the following integration types aims at reducing transaction costs?

Accepted Answer

A)  Vertical integration 
B)  Horizontal integration 
C)  Cointegration 
D)  Conglomerate integration 
A)  Vertical integration 
B)  Horizontal integration 
C)  Cointegration 
D)  Conglomerate integration

Question 3

The Dansby-Willig index measures the potential for a change in:

Accepted Answer

A)  production cost. 
B)  firm's revenue. 
C)  firm's profit. 
D)  social welfare. 
A)  production cost. 
B)  firm's revenue. 
C)  firm's profit. 
D)  social welfare.

Question 4

The concentration and HHI reported in the U.S.Bureau of Census must be interpreted with caution since:

Accepted Answer

A)  they are calculated by excluding foreign imports, hence they bias upward the degree of concentration. 
B)  they are based on figures for the entire national market. 
C)  the definition of product classes used to define an industry affects the results. 
D)  All of the answers are correct. 
A)  they are calculated by excluding foreign imports, hence they bias upward the degree of concentration. 
B)  they are based on figures for the entire national market. 
C)  the definition of product classes used to define an industry affects the results. 
D)  All of the answers are correct.

Question 5

When economies of scale are large,firms can reduce their average total cost by:

Accepted Answer

A)  selling off their subsidiaries. 
B)  merging into even larger firms. 
C)  eliminating the bureaucratic costs. 
D)  hiring professional managers. 
A)  selling off their subsidiaries. 
B)  merging into even larger firms. 
C)  eliminating the bureaucratic costs. 
D)  hiring professional managers.

Question 6

It is sometimes said that a manager of a monopoly can charge any price and customers will still have to buy the product.Do you agree or disagree?
 Why?

Accepted Answer

No.Once the monopoly has chosen the pric

Question 7

The widget industry is comprised of six firms of varying sizes.Firm 1 has 35 percent of the market.Firm 2 has 25 percent,and the remaining firms have 10 percent each.What is the Herfindahl-Hirschman index for the widget industry?
 Based on the U.S.Department of Justice merger guidelines described in the text,do you think the Justice Department would be likely to block a merger between firms 5 and 6?

Accepted Answer

Before the merger,HHI = 10,000[(.35)² + (

Question 8

C4 and HHI tend to ____________ the concentration in a domestic industry.

Accepted Answer

A)  provide different rankings of 
B)  understate 
C)  overstate 
D)  understate or overstate, depending on the true geographic market 
A)  provide different rankings of 
B)  understate 
C)  overstate 
D)  understate or overstate, depending on the true geographic market

Question 9

An industry consists of four firms with annual sales of $300,$500,$400,and $600,respectively.What is the industry's HHI?

Accepted Answer

A)  1,659 
B)  2,654 
C)  10,000 
D)  There is not sufficient information to compute the industry HHI. 
A)  1,659 
B)  2,654 
C)  10,000 
D)  There is not sufficient information to compute the industry HHI.

Question 10

Star Computer and a small telecommunications company are considering a merger.A socially minded member of Star Computer's board of directors is against the merger,however,because she is concerned that the merger might not benefit society as a whole.Provide the board member with an argument for why it may be socially beneficial for the merger to take place.

Accepted Answer

The merger may generate econom

Question 11

Which of the following are measures of industry concentration?

Accepted Answer

A)  Four-firm concentration ratio 
B)  HHI index 
C)  Consumer surplus 
D)  Four-firm concentration ratio and HHI index 
A)  Four-firm concentration ratio 
B)  HHI index 
C)  Consumer surplus 
D)  Four-firm concentration ratio and HHI index

Question 12

An industry is comprised of 25 firms,each with an equal market share.What is the four-firm concentration ratio of this industry?

Accepted Answer

A)  0.12 
B)  0.16 
C)  0.20 
D)  0.25 
A)  0.12 
B)  0.16 
C)  0.20 
D)  0.25

Question 13

Which of the following is NOT a type of integration?

Accepted Answer

A)  Vertical mergers 
B)  Horizontal mergers 
C)  Mega mergers 
D)  Conglomerate merger 
A)  Vertical mergers 
B)  Horizontal mergers 
C)  Mega mergers 
D)  Conglomerate merger

Question 14

Some firms find conglomerate mergers advantageous since they permit firms to:

Accepted Answer

A)  take advantage of economies of scope. 
B)  take advantage of economies of scale. 
C)  pool cash flows resulting from products with low and high periods. 
D)  reduce input costs. 
A)  take advantage of economies of scope. 
B)  take advantage of economies of scale. 
C)  pool cash flows resulting from products with low and high periods. 
D)  reduce input costs.

Question 15

An industry consists of five firms with annual sales of $1,300,$500,$400,$100,and $600.What is the industry's HHI?

Accepted Answer

A)  2,937 
B)  5,654 
C)  10,000 
D)  There is not sufficient information to compute the industry HHI. 
A)  2,937 
B)  5,654 
C)  10,000 
D)  There is not sufficient information to compute the industry HHI.

Question 16

Monopolistic competition is characterized by:

Accepted Answer

A)  heterogeneous products. 
B)  employing labor from a perfectly competitive labor market. 
C)  no free entry. 
D)  large markets. 
A)  heterogeneous products. 
B)  employing labor from a perfectly competitive labor market. 
C)  no free entry. 
D)  large markets.

Question 17

"The law of comparative advantage suggests that managers should specialize in learning the tools needed to manage either a monopoly,oligopoly,monopolistically competitive,or perfectly competitive firm." Do you agree with this statement?

Accepted Answer

No.As industries mat

Question 18

According to the "feedback critique":

Accepted Answer

A)  the conduct of firms in an industry may affect the firm's performance. 
B)  the conduct of firms in an industry may affect the market structure. 
C)  market structure may affect the firm's conduct. 
D)  All of the statements associated with this question are correct. 
A)  the conduct of firms in an industry may affect the firm's performance. 
B)  the conduct of firms in an industry may affect the market structure. 
C)  market structure may affect the firm's conduct. 
D)  All of the statements associated with this question are correct.

Question 19

The Dansby-Willig index measures the potential for a change in social welfare by examining the effect of changes in industry:

Accepted Answer

A)  production cost. 
B)  output. 
C)  revenue. 
D)  profit. 
A)  production cost. 
B)  output. 
C)  revenue. 
D)  profit.

Question 20

An electronics company takes over one of its original suppliers in a merger.This is an example of:

Accepted Answer

A)  vertical integration. 
B)  horizontal integration. 
C)  cointegration. 
D)  conglomerate integration. 
A)  vertical integration. 
B)  horizontal integration. 
C)  cointegration. 
D)  conglomerate integration.

A student figured out that the HHI for an industry was 15,000.What is the proper conclusion?

Which of the following integration types aims at reducing transaction costs?

The Dansby-Willig index measures the potential for a change in:

The concentration and HHI reported in the U.S.Bureau of Census must be interpreted with caution since:

When economies of scale are large,firms can reduce their average total cost by:

It is sometimes said that a manager of a monopoly can charge any price and customers will still have to buy the product.Do you agree or disagree? Why?

C₄ and HHI tend to ____________ the concentration in a domestic industry.

An industry consists of four firms with annual sales of $300,$500,$400,and $600,respectively.What is the industry's HHI?

Which of the following are measures of industry concentration?

An industry is comprised of 25 firms,each with an equal market share.What is the four-firm concentration ratio of this industry?

Which of the following is NOT a type of integration?

Some firms find conglomerate mergers advantageous since they permit firms to:

An industry consists of five firms with annual sales of $1,300,$500,$400,$100,and $600.What is the industry's HHI?

Monopolistic competition is characterized by:

"The law of comparative advantage suggests that managers should specialize in learning the tools needed to manage either a monopoly,oligopoly,monopolistically competitive,or perfectly competitive firm." Do you agree with this statement?

According to the "feedback critique":

The Dansby-Willig index measures the potential for a change in social welfare by examining the effect of changes in industry:

An electronics company takes over one of its original suppliers in a merger.This is an example of:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 7: The Nature of Industry

A student figured out that the HHI for an industry was 15,000.What is the proper conclusion?

Which of the following integration types aims at reducing transaction costs?

The Dansby-Willig index measures the potential for a change in:

The concentration and HHI reported in the U.S.Bureau of Census must be interpreted with caution since:

When economies of scale are large,firms can reduce their average total cost by:

It is sometimes said that a manager of a monopoly can charge any price and customers will still have to buy the product.Do you agree or disagree? Why?

C4 and HHI tend to ____________ the concentration in a domestic industry.

An industry consists of four firms with annual sales of $300,$500,$400,and $600,respectively.What is the industry's HHI?

Which of the following are measures of industry concentration?

An industry is comprised of 25 firms,each with an equal market share.What is the four-firm concentration ratio of this industry?

Which of the following is NOT a type of integration?

Some firms find conglomerate mergers advantageous since they permit firms to:

An industry consists of five firms with annual sales of $1,300,$500,$400,$100,and $600.What is the industry's HHI?

Monopolistic competition is characterized by:

"The law of comparative advantage suggests that managers should specialize in learning the tools needed to manage either a monopoly,oligopoly,monopolistically competitive,or perfectly competitive firm." Do you agree with this statement?

According to the "feedback critique":

The Dansby-Willig index measures the potential for a change in social welfare by examining the effect of changes in industry:

An electronics company takes over one of its original suppliers in a merger.This is an example of:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

C₄ and HHI tend to ____________ the concentration in a domestic industry.