Suppose that two clothing manufacturers, Frederick's Fashions and Stephan's Styles, announce that they plan to merge. The Herfindahl-Hirschman index is currently 1,500. After the merger, the HHI will rise to 1,560. This market is
A) highly concentrated and so the government will definitely challenge the merger.
B) moderately concentrated and because the merger increases the HHI by more than 50 points, the government will definitely challenge the merger.
C) moderately concentrated, but because the merger increases the HHI by less than 100 points, the government will probably not challenge the merger.
D) competitive and so the government will not challenge the merger.
C
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A consumption tax system is likely to benefit
A) higher income individuals. B) an individual who, regardless of income, is a large consumer. C) corporations. D) lower income individuals.
Economists consider the effects of free trade on income distribution to be ________ important than the effects on overall welfare because ________
A) less; those who are harmed can be compensated by those who gain B) more; those who are harmed are not compensated by those who gain C) less; the effects on income distribution are minor and inconsequential D) more; the effects on income distribution are major and consequential E) less; the wealthy benefit and only the poor lose