If an industry currently has a Herfindahl index of 900 and a merger would raise that to 950, then the Department of Justice would generally
a. challenge the merger because the index would become too large
b. challenge the merger because the change in the index is too large
c. not challenge the merger because the postmerger index is less than 1,800
d. not challenge the merger if it is a horizontal merger
e. challenge the merger if it is a vertical merger
C
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If an average cost pricing rule is imposed on the natural monopoly shown in the figure above, then the firm's economic profit will be
A) $9 million. B) $12 million. C) $0, that is, the firm's owners make only a normal profit. D) negative, that is, the firm incurs an economic loss.
Non-activists believe that the principal source of AD instability is
A) private investment spending. B) private consumption spending. C) erratic government policy. D) All of the above.