Question 1

The closer a market's Herfindahl- Hirschman Index (HHI)is to_____ the more competitive the market, which means there are _____firms in the market.

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is a measure of market concentration, and a lower HHI (closer to 0 or 100) indicates a more competitive market with many firms. A higher HHI (closer to 10,000) suggests a less competitive market with fewer firms.

Question 2

An antitrust agency is identifying the product market for Good X and determines that Good X and Good Y have a cross- price elasticity of 18.6. As a result of the cross- price elasticity, the antitrust agency is likely tov Good Y from Good X's product market as the products ______ compete as close substitutes.

Accepted Answer

A high cross-price elasticity of 18.6 indicates that Good X and Good Y are close substitutes, meaning that a price change in one will significantly affect the demand for the other. Therefore, the antitrust agency is likely to include Good Y in Good X's product market as they do compete as close substitutes.

Question 3

If there are four firms in a market and one has a 40 percent market share, one has a 25 percent market share, one has a 20 percent market share, and one has a 15 percent market share, the Herfindahl- Hirschman Index (HHI)in this market is_____ .

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm and then summing the results: (40^2) + (25^2) + (20^2) + (15^2) = 1600 + 625 + 400 + 225 = 2850.

Question 4

If there are five firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI)is_____ .

Accepted Answer

The answer of If there are five firms in a...

Question 5

Typically, antitrust agencies closely examine vertical mergers and horizontal mergers receive much less scrutiny.

Accepted Answer

The statement is incorrect. Antitrust agencies closely scrutinize horizontal mergers, as they involve firms in the same industry or product market and can reduce competition. Vertical mergers, on the other hand, involve firms at different stages of the production or distribution process and may have less impact on competition.

Question 6

When considering the legality of a horizontal merger, U.S. antitrust agencies tend to emphasize the importance of consumer surplus rather than total surplus.

Accepted Answer

U.S. antitrust agencies tend to focus on the impact of a horizontal merger on consumer welfare, which is typically measured by consumer surplus. While total surplus (including producer surplus) is also considered, consumer surplus is often given greater weight in antitrust analysis.

Question 7

The closer a market's Herfindahl- Hirschman Index (HHI)is to the_____ less competitive the market, which means there are_____ firms in the market.

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is a measure of market concentration, and a higher HHI (closer to 10,000) indicates a less competitive market with fewer firms dominating.

Question 8

If the merger of two firms is challenged by an antitrust agency, one possible solution is for the firms to_____ .

Accepted Answer

Selling some of their assets to a third firm would create a new competitor in the market, increasing competition and satisfying antitrust concerns. The other options do not address the issue of reducing competition, which is the reason the merger is being challenged by the antitrust agency.

Question 9

If there are ten firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI)is _____.

Accepted Answer

HHI is calculated by squaring the market share of each firm in the market and summing up the resulting numbers. In this case, since each firm has an equal market share of 1/10, the HHI would be (1/10)^2 * 10 = 1. Therefore, the correct choice is D) 1,000.

Question 10

In 2017, the Federal Trade Commission required firms to report any merger involving assets that exceeded $80.8 million.

Accepted Answer

The Federal Trade Commission did indeed require firms to report any merger involving assets that exceeded $80.8 million in 2017.

Question 11

If a pre- merger Herfindahl- Hirschman Index (HHI)is greater than ______ , the market is considered not competitive and any merger receives a high level of scrutiny.

Accepted Answer

According to the U.S. Department of Justice, if the HHI is above 2,500, the market is considered highly concentrated, and any merger or acquisition that increases the HHI by more than 200 points in a highly concentrated market is likely to be subject to close scrutiny by the antitrust authorities.

Question 12

The basic goal of identifying a product market is for antitrust agencies to determine the products that consumers consider close substitutes.

Accepted Answer

Identifying a product market helps antitrust agencies determine which products are close substitutes, which is important for assessing competition in the market and potential anticompetitive behavior by firms.

Question 13

Using the SSNIP test, if two firms merge and the result is that the new, merged firm can raise the price of its product by _____percent for _____year(s), then the product the merged firm produces represents a market.

Accepted Answer

The SSNIP test stands for the Small but Significant and Non-transitory Increase in Price test. The test is used to determine whether a merger or acquisition will create or enhance market power. According to the test, if a merged firm can raise the price of its product by a small amount, typically 5% or less, for a sustained period, typically one year, then the product the merged firm produces represents a market. Option C states that the merged firm can raise the price of its product by 5% for one year which aligns with the SSNIP test, making it the best answer.

Question 14

The minimum value of the Herfindahl- Hirschman Index (HHI)is_____ and the maximum value is_____ .

Accepted Answer

The answer of The minimum value of the Herfindahl- Hirschman...

Question 15

It is possible for a horizontal merger to increase the total surplus in the market.

Accepted Answer

A horizontal merger can lead to cost savings, increased efficiency, and improved products, which can result in lower prices for consumers and higher profits for companies. This can increase the total surplus in the market. However, it is important to consider potential negative effects such as decreased competition and market power.

Question 16

If there are eight firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI)is and the market is_____considered to be ______ .

Accepted Answer

The HHI is calculated by summing the squares of the market shares of each firm in the market. In this case, each firm has an equal market share of 1/8, so the HHI is 8*(1/8)^2 = 1,250. An HHI below 1,500 indicates a competitive market.

Question 17

If a pre- merger Herfindahl- Hirschman Index (HHI)is between _____, the market is considered moderately competitive and if a merger in this market raises the HHI by more than ______ , antitrust agencies worry about the potential loss of competition.

Accepted Answer

The correct range for a market to be considered moderately competitive according to the Herfindahl-Hirschman Index (HHI) is between 1,500 and 2,500. If a merger raises the HHI by more than 100 in such a market, antitrust agencies may become concerned about the potential loss of competition.

Question 18

If a pre- merger Herfindahl- Hirschman Index (HHI)is less than ______, the merger is unlikely to be challenged.

Accepted Answer

A pre-merger HHI less than 1,500 signals a highly competitive market, which makes it unlikely for the merger to be challenged by regulatory authorities.

Question 19

An antitrust agency is identifying the product market for Good X and determines that Good X and Good Y have a cross- price elasticity of 15.2. As a result of the cross- price elasticity, the antitrust agency is likely to _____Good Y from Good X's product market as the products ______ compete as close substitutes.

Accepted Answer

The high cross-price elasticity of 15.2 indicates that the demand for one good is highly sensitive to the price change of the other, suggesting that Goods X and Y are close substitutes. Therefore, the antitrust agency is likely to include Good Y in Good X's product market because the products do compete as close substitutes.

Question 20

If there are four firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI)is_____ .

Accepted Answer

The answer of If there are four firms in a...

Quiz 9: A Managers Guide to Antitrust Policy

The closer a market's Herfindahl- Hirschman Index (HHI) is to_ the more competitive the market, which means there are _firms in the market.

If there are four firms in a market and one has a 40 percent market share, one has a 25 percent market share, one has a 20 percent market share, and one has a 15 percent market share, the Herfindahl- Hirschman Index (HHI) in this market is_____ .

If there are five firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI) is_____ .

Typically, antitrust agencies closely examine vertical mergers and horizontal mergers receive much less scrutiny.

When considering the legality of a horizontal merger, U.S. antitrust agencies tend to emphasize the importance of consumer surplus rather than total surplus.

The closer a market's Herfindahl- Hirschman Index (HHI) is to the_ less competitive the market, which means there are_ firms in the market.

If the merger of two firms is challenged by an antitrust agency, one possible solution is for the firms to_____ .

If there are ten firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI) is _____.

In 2017, the Federal Trade Commission required firms to report any merger involving assets that exceeded $80.8 million.

If a pre- merger Herfindahl- Hirschman Index (HHI) is greater than ______ , the market is considered not competitive and any merger receives a high level of scrutiny.

The basic goal of identifying a product market is for antitrust agencies to determine the products that consumers consider close substitutes.

Using the SSNIP test, if two firms merge and the result is that the new, merged firm can raise the price of its product by _percent for _year(s) , then the product the merged firm produces represents a market.

The minimum value of the Herfindahl- Hirschman Index (HHI) is_ and the maximum value is_ .

It is possible for a horizontal merger to increase the total surplus in the market.

If there are eight firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI) is and the market is_considered to be __ .

If a pre- merger Herfindahl- Hirschman Index (HHI) is between _, the market is considered moderately competitive and if a merger in this market raises the HHI by more than __ , antitrust agencies worry about the potential loss of competition.

If a pre- merger Herfindahl- Hirschman Index (HHI) is less than ______, the merger is unlikely to be challenged.

If there are four firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI) is_____ .

Quiz 9: A Managers Guide to Antitrust Policy

The closer a market's Herfindahl- Hirschman Index (HHI) is to_____ the more competitive the market, which means there are _____firms in the market.

If there are four firms in a market and one has a 40 percent market share, one has a 25 percent market share, one has a 20 percent market share, and one has a 15 percent market share, the Herfindahl- Hirschman Index (HHI) in this market is_____ .

If there are five firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI) is_____ .

Typically, antitrust agencies closely examine vertical mergers and horizontal mergers receive much less scrutiny.

When considering the legality of a horizontal merger, U.S. antitrust agencies tend to emphasize the importance of consumer surplus rather than total surplus.

The closer a market's Herfindahl- Hirschman Index (HHI) is to the_____ less competitive the market, which means there are_____ firms in the market.

If the merger of two firms is challenged by an antitrust agency, one possible solution is for the firms to_____ .

If there are ten firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI) is _____.

In 2017, the Federal Trade Commission required firms to report any merger involving assets that exceeded $80.8 million.

If a pre- merger Herfindahl- Hirschman Index (HHI) is greater than ______ , the market is considered not competitive and any merger receives a high level of scrutiny.

The basic goal of identifying a product market is for antitrust agencies to determine the products that consumers consider close substitutes.

Using the SSNIP test, if two firms merge and the result is that the new, merged firm can raise the price of its product by _____percent for _____year(s) , then the product the merged firm produces represents a market.

The minimum value of the Herfindahl- Hirschman Index (HHI) is_____ and the maximum value is_____ .

It is possible for a horizontal merger to increase the total surplus in the market.

If there are eight firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI) is and the market is_____considered to be ______ .

If a pre- merger Herfindahl- Hirschman Index (HHI) is between _____, the market is considered moderately competitive and if a merger in this market raises the HHI by more than ______ , antitrust agencies worry about the potential loss of competition.

If a pre- merger Herfindahl- Hirschman Index (HHI) is less than ______, the merger is unlikely to be challenged.

If there are four firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI) is_____ .

The closer a market's Herfindahl- Hirschman Index (HHI) is to_ the more competitive the market, which means there are _firms in the market.

The closer a market's Herfindahl- Hirschman Index (HHI) is to the_ less competitive the market, which means there are_ firms in the market.

Using the SSNIP test, if two firms merge and the result is that the new, merged firm can raise the price of its product by _percent for _year(s) , then the product the merged firm produces represents a market.

The minimum value of the Herfindahl- Hirschman Index (HHI) is_ and the maximum value is_ .

If there are eight firms in a market and each has an equal market share, the Herfindahl- Hirschman Index (HHI) is and the market is_considered to be __ .

If a pre- merger Herfindahl- Hirschman Index (HHI) is between _, the market is considered moderately competitive and if a merger in this market raises the HHI by more than __ , antitrust agencies worry about the potential loss of competition.