Exam 3 Form A with Key

Exam 3 Form A with Key - Econ 002 FORM A Exam 3 McLeod Name...

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Econ 002 Exam 3 McLeod FORM A Name __________________________________ ID# ______________________________________ Firm Total Sales 1 $50 million 2 $50 million 3 $40 million 4 $30 million 5 $20 million 6 $10 million 1. Refer to the table above. Assuming there are only 6 firms in the industry, what is the 4-firm concentration index for this industry? A) 17% B) 60% C) 70% D) 85% E) None of the above 2. Guaranteed price matching, which occurs when a firm announces that it will automatically match any competitor’s price is A) good for consumers because it keeps prices low. B) bad for consumers because it keeps prices high. C) does not affect consumers since it does not actually affect the price of the product. 3. Suppose there 5 firms in an industry. Each firm accounts for 20% of total industry sales. What is the Herfindahl-Hirschman Index (HHI) for this industry? A) 20 B) 200 C) 1000 D) 2000 E) None of the above 4. Refer to the question above. If two of the firms were to merge, would this merger be challenged by the FTC? A) Yes B) No
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5. Which key assumption do we change when going from the analysis of a perfectly competitive industry to a monopolistically competitive industry? A) In perfect competition, firms produce identical products whereas in monopolistic competition firms produce slightly differentiated products. B) In perfect competition, firms can enter the market in the long run whereas in monopolistic competition firms cannot enter the market in the long run. C) In perfect competition, there are many firms whereas in monopolistic competition there are only a few firms. D) In perfect competition, consumers have perfect knowledge of the prices which the firms charge for their product whereas in monopolistic competition consumers do not have perfect knowledge of the prices which the firms charge for their product. 6. In a monopolistically competitive industry, in the long run we expect that A) firms will make positive economic profits B) firms will produce at the minimum of average total cost C) firms will make zero economic profit D) firms will produce at greater than the minimum of average total cost E) More than one answer is correct. 7. Which government agencies are responsible for enforcing antitrust laws?
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This note was uploaded on 03/02/2008 for the course ECON 002 taught by Professor Mcleod,markpehlivan,ayseozg during the Spring '08 term at Penn State.

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Exam 3 Form A with Key - Econ 002 FORM A Exam 3 McLeod Name...

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