Micro_lecture_10

What is a corporate merger?

• When two firms enter a cartel

• When one firm buys a competitor's shares

• When two formerly separate firms combine into one firm

• When a firm splits into smaller entities

What is the primary goal of antitrust laws?

• Maximize profits for large firms

• Encourage mergers and acquisitions

• Ensure active competition in markets

• Eliminate all monopolies

What does the four-firm concentration ratio measure?

• Number of competitors in a market

• Share of total sales by the four largest firms

• Profit margins of leading firms

• Percentage of market under government control

A Herfindahl-Hirschman Index (HHI) score of 10,000 represents:

• Perfect competition

• A monopoly

• Moderate competition

• An oligopoly

Which event would increase the four-firm concentration ratio?

• Entry of a new competitor

• Merger of two firms in the top four

• Technological innovation by smaller firms

• Decline in market share of leading firms

What are restrictive practices?

• Collusion to set prices

• Practices reducing competition without explicit agreements

• Actions by firms to increase production

• Regulations imposed by the government

What is predatory pricing?

• Selling products below cost to drive competitors out

• Setting high prices to maximize profits

• Offering discounts for bulk purchases

• Price matching competitors

Tying sales require:

• A customer to buy one product to obtain another

• Setting a fixed price for all customers

• Merging with another company

• Selling at a loss to gain market share

Which is an example of bundling?

• A customer buys a TV and a warranty together

• A retailer offers a discount for multiple purchases

• Combining internet, cable, and phone services in one package

• Selling a product only if another product is bought

Which of the following is legal under U.S. antitrust law?

• Forming a cartel to set prices

• Suggesting minimum prices for dealers

• Requiring exclusive dealing agreements

• Mandating predatory pricing