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? 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?
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