Name: _ Class: _ Date: _
ECON 1B/2B PRACTICE EXAM CH 08
Identify the choice that best completes the statement or answers the question.
1. What happens to the total surplus in a market when the government imposes a tax?
a. Total surplus i
1. A. What is the cell theory? B. Why are cells considered the smallest unit of life?
C. What size is a cell? D. Why must cells be small ?
2. A. What are the two major types of cells?
2. The HernaahI-Hlmhmanlndex An A: 5
Suppose that three rms make up the entlre wlg manufactung Industry. One has a SUE-h market share, and the
other two have a 25% market share each.
The Herndahl-lesehman Index uftl'lls Industry I5 3,?5D i" .
4. Predatory pricing and resale price maintenance A: ha a
Televik Is a firm that produces televisions. Suppose Televirir sells its televisions to retail stores for $1,EH:IEII each and
requires those retailers to marge customers $1,1DD for each television.
Antitrust Policy and Regulation
Graded Assignment | Read Chapter 12 | Back to Home Due Sundayr 01.25.14 at 11:45 PM
This problem set reviews the major concepts surrounding antitmst policy and regulation, including the legal history of antitmst
Suppose a new rm, Mane Attractlon, enters the wlg manufacturing Industry and Immedlately captures a 20% share
or the market. Thls would cause the HerllndahI-lesd'lman Index for the Industry to fall of .
Explanatlon: lm A
The Herndahl-leschman Index measur
Suppose that the government forces the monopolist to set the price equal to marginal cost. In the shalt run, under a
marginal-cost pricing regulation, the monopolist will provide cable services to 51,000 a! households per month at
a price of $20 if .
1. To regulate or not to regulate Ha ha EL
Slnoe the late 19?Ds, the United States government has deregulated several Industries, such as the airline, trucking,
and railroad Industries. Which of the following is true regarding this deregulation movement?
0. Regulating I'lilhll'all'lllll'lpl'f ha ha =
Consider the local cable company, a natural monopoly. 11'le following graph shows the demand curve for cable
services, the company's marginal revenue ourve cfw_labeled HR], Its marginal cost ourve cfw_labeled
5. When fewer firm: are better a A: E
Wei: Elinger is an Internet service provider. In the long run, Web Elinger can provide Internet service for 20,000
homes ead'l month at a total east of $700,000, Internet service for 30,000 homes at a total east of $2
1. Antitrust [mumr Aa Aa =
True or False: A market wlth onlv a few rms in operatlon cannot be a oontestable market.
11" Q False
Explanallun: lm A
If rms can enter a market easllv wlth llttle rlsk of suffering a substantlal loss of wealth, oompetltl
3. Twotypesofmergers A: Aa 3
Suppose a newspaper publisher merges with a paper and pulp mlll.
This merger Is best classied as a vertical 1! merger.
Explanatlon: Elm A
A 1rertlosul merger ooours when a rm merges with one of lts suppllers. A newspaper puhll
Under average-cost pricing, the government will raise the price of output whenever a rm's costs Increase and lower
the price whenever a firm's costs decrease. IItrrver time, under the average-cost pricing policy, the local cable company
will most likely:
Web Ellnger provloes Internet servlce for all 40,000 homes that purchase Internet service ln the metropolltan area.
This sltuatlon can best be characterized as:
O Dlseoonomles of scale
1! E: A natural monopolyr
Explanatlon: lm A
A ham-a! monopoly results