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1) After seven years of negotiations, twelve countries - including

the United States, Japan, Vietnam, and nine other Pacific Rim countries - signed the Trans-Pacific Partnership (TPP). A key feature of the TPP is the lifting of tariffs on many products traded between the member countries, ranging from agriculture to footwear. As each member country went through the process of ratifying the agreement, numerous domestic firms and collective interests voiced opposition. In the United States, New Balance was one of these opposing firms, specifically stating its disapproval of phasing out U.S. tariffs on shoes made in Vietnam.


What would a reduction of U.S. tariffs on Vietnamese shoes do to the supply of Vietnamese shoes in the U.S.?


multiple choice 1

-It will not change.
-It will decrease.
-It will increase.

What impact would this have on the equilibrium quantity of shoes sold in the United States?


multiple choice 2

-It will decrease.
-It will not change.
-It will increase.





Would the tariff reduction cause the equilibrium price for shoes in the United States to increase or decrease?



-It will decrease.
-It will not change.
-It will increase.

2) ou are the manager in a market composed of eight firms, each of which has a 12.5 percent market share. In addition, each firm has a strong financial position and is located within a 100-mile radius of its competitors.


Instruction: Enter your responses rounded to the nearest penny (two decimal places).


a. Calculate the premerger Herfindahl-Hirschman index (HHI) for this market.


 




b. Suppose that any two of these firms merge. What is the postmerger HHI?


 




c. Based only on the information contained in this question and on the U.S. Department of Justice Horizontal Merger Guidelines described in this chapter, do you think the Justice Department would attempt to block a merger between any two of the firms?


multiple choice

-It may, but will likely consider other factors as well.
-It likely will not.
-It likely will.3) You are an industry analyst that specializes in an industry where the market inverse demand is P = 150 - 5Q. The external marginal cost of producing the product is MCExternal = 8Q, and the internal cost is MCInternal = 15Q.


Instructions: Enter your responses rounded to the nearest two decimal places.


a. What is the socially efficient level of output?


 units




b. Given these costs and market demand, how much output would a competitive industry produce?


 units




c. Given these costs and market demand, how much output would a monopolist produce?


 units




d. Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output.


Instructions:  In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click twice to empty the box.


check all that apply



-Nonrival consumption
-unanswered
-Pollution permits
-unanswered
-Pollution taxes4) As the manager of a monopoly, you face potential government regulation. Your inverse demand is P = 70 - 1Q, and your costs are C(Q) = 22Q.


a. Determine the monopoly price and output.


Monopoly price: $ 
 
Monopoly output:  units




b. Determine the socially efficient price and output.


Socially efficient price: $ 
 
Socially efficient output:  units




c. What is the maximum amount your firm should be willing to spend on lobbying efforts to prevent the price from being regulated at the socially optimal level?



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