Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger. The U.S. Justice Department concludes the merger will boost the index to 1,050. The antitrust authorities will most likely:
A. ignore this merger because of the relatively small size of, and increase in, the Herfindahl
index.
B. prevent the merger, contending that it violates the Clayton Act.
C. allow the merger if foreign entry to the industry is possible.
D. allow the merger but watch the new firm carefully for future violations of the antitrust laws.
Answer: A
You might also like to view...
Which of the following was not a cause of the Savings and Loan crisis of the 1980s?
(A) The gold standard (B) High interest rates (C) The deregulation of the industry (D) Bad loans
If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?
A) Average cost increases as more is produced. B) Average cost will fall. C) Average cost could increase or decrease depending on what happens to variable cost. D) Average cost could increase or decrease depending on what happens to fixed cost.