Adaptive expectations is a school of thought that argues people form expectations based on all available information, including the likely future actions of government policy makers

Suppose a profit-maximizing firm in a competitive market produces rubber bands. When the market price for rubber bands rises above the minimum of its average variable cost, but still lies below the minimum of average total cost, in the short run the firm will

a. experience losses but will continue to produce rubber bands. b. shut down. c. earn both economic and accounting profits. d. raise the price of its product.

The U.S. antitrust enforcers will likely block a merger if

A) the merging firms already earn excessive profits. B) the merging firms are in different markets. C) the merger will substantially increase market power. D) the degree of concentration declines as a result of the merger.