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Home / Questions / The Justice Department considers a Herfindahl index that is ____________________________ t

The Justice Department considers a Herfindahl index that is ____________________________ t

The Justice Department considers a Herfindahl index that is ____________________________ to be representative of a moderately concentrated industry.

a.less than 1,000

b.between 1,000 and 1,800

c.greater than 1,800

d.greater than 2,000

 

 

 

22.The Justice Department considers a Herfindahl index ____________________________ to be representative of a concentrated industry.

a.less than 1,000

b.between 1,000 and 1,800

c.greater than 1,800

d.greater than 10,000

 

 

 

23.What is the Herfindahl index of a monopoly?

a.10

b.100

c.1,000

d.10,000

 

 

 

24.What is the maximum value of the Herfindahl index?

a.10

b.100

c.1,000

d.10,000

e.There is no maximum value of the Herfindahl index.

 

 

 

25.Natural monopoly exists when

a.one firm can supply the entire output demanded at lower cost than two or more firms can.

b.one firm can supply the entire output demanded at higher cost than two or more firms can.

c.one firm can supply the entire output demanded at the same cost as two or more firms.

d.one firm controls all of the rights to a scarce resource.

 

 

 

26.Which of the following is usually considered a natural monopoly?

a.a major car manufacturer

b.a car stereo installer

c.overnight mail services

d.state universities

e.none of the above

 

 

 

27.Which of the following is not a way that natural monopolies are regulated?

a.Government regulators determine the price of the product.

b.Government regulators determine an acceptable profit.

c.Government regulators determine an acceptable output.

d.Government regulators determine which patents the monopoly can retain.

 

 

 

28.If government regulators want a natural monopolist to earn only zero economic profits, then they will set a price

a.equal to average total cost (ATC).

b.equal to marginal cost.

c.such that marginal revenue equals marginal cost.

d.none of the above

 

 

 

29.If average total costs for a natural monopoly are declining where they intersect the demand curve, and government regulators set the price equal to marginal cost, then the firm will

a.likely earn a profit.

b.likely break even.

c.likely suffer a loss.

d.surely go out of business.

e.There is not enough information to answer this question.

 

 

 

30.One of the criticisms of average cost regulated pricing of a natural monopoly is that the firm

a.has no incentive to hold costs down.

b.must bear losses continually.

c.will retain positive economic profits.

d.produces more output than is resource-allocative efficient.

 

 

 

31.Which of the following is an example of government regulation of a natural monopoly distorting incentives?

a.A natural monopoly is held to average-cost pricing; therefore, it has little incentive to hold costs down.

b.A natural monopoly is protected from competitors; therefore, it is rude to its customers.

c.A natural monopoly is protected from competitors; therefore, it doesn't care much about the quality of the product it sells.

d.a and c

e.a, b, and c

 

 

 

32.If government regulators guarantee that a natural monopoly will earn normal profits, then

a.the monopolist has little or no incentive to hold down its costs.

b.the monopolist has a sharp incentive to hold down its costs so as to increase profits.

c.the monopolist will probably try its best to maintain its costs at the current level.

d.it is impossible to determine the monopolist's incentives regarding costs before the firm actually incurs some changes in its costs.

 

 

 

33.If government regulators guarantee a natural monopolist that it will earn normal profits, then the monopolist will

a.achieve resource-allocative efficiency.

b.charge a price above average total cost.

c.produce a quantity of output at which marginal revenue equals price.

d.none of the above

Dec 09 2019 View more View Less

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