1,Which market structure is characterized by a large number of firm (usually more than 12) selling products that are substitutes for each other but not identical to each other?

Multiple Choice

• Pefect competition

• Monopolistic Competition

• Oligopoly

• Monopoly

2,

You are working for the Department of Justice, reviewing a proposed merger between two firms. You've calculated the Herfindahl Index for this industry and it is 2250 before the merger takes place. Which of the following is correct?

Multiple Choice

• This merger will definitely not be challenged

• The merger will definitely be challenged

• This merger may be challenged depending on how much the Herfindahl decreases if the merger were to be allowed

• The merger may be challenged depending on how much the Herfindahl increases if the merger were to be allowed

3.

Consider these three statements:

I. Firms can earn profits in the short run but not in the long run

II. In the long run P will be greater than MC

III. Demand curve for an individual firm is downward-sloping

Which is most correct?

Multiple Choice

• I and II describe monopolistic competition but III does not

• I and III describe monopolistic competition but II does not

• II and III describe monopolistic competition but I does not

• All three (I, II and III) describe monopolistic competition