1. Which of the following are most likely to be in violation of the Sherman and...

1. Which of the following are most likely to be in violation of the Sherman and Clayton Antitrust Acts?

A. Conglomerate mergers.

B. Horizontal mergers.

C. Vertical mergers.

D. Diagonal mergers.

2. If a perfectly competitive firm finds that price is less than average variable cost it should:

A. not adjust output if marginal cost equals price.

B. shutdown immediately.

C. increase output until price equals marginal cost.

D. decrease output until price equals marginal cost.

3. In order to maximize profit, a perfectly competitive firm should produce that quantity:

A. where AR=ATC.

B. where economic profits are greater than zero.

C. where MR=MC.

D. where fixed costs and variable costs are covered.

Solutions

Expert Solution

1. B) horizontal mergers

This is merger of direct competitors which was the main concern

2. B) Shut down immediately

If price is less than avc then the firm could not incur variable cost of production , which is needed for each amount of production then firm must shut down

3 . C) MR= MC

In perfect competition, p is given, so p= ar= mr

So profit maximised at mr= p= mc

Rahul Sunny answered 1 year ago

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