Merger guidelines developed by the Antitrust Division of the U.S. Department of Justice use four-firm concentration ratios as measures of concentration

Refer to Figure 23-1. If the economy is at point L, what will happen?

A) Inventories have risen above their desired level, and firms decrease production. B) Inventories have risen above their desired level, and firms increase production. C) Inventories have fallen below their desired level, and firms increase production. D) Inventories have fallen below their desired level, and firms decrease production.

The cost function is:

a. a means for expressing output as a function of cost b. a schedule or mathematical relationship showing the total cost of producing various quantities of output c. similar to a profit and loss statement d. incapable in being developed from statistical regression analysis e. none of the above