2. The four-firm concentration for an industry is 0.91 or 91%. Is this industry likely to be competitive? Explain your answer.

Answer the following multiple choice questions.

3. Ben and Jerry run an ice cream factory in Vermont. Ben and Jerry hold 75 percent of stock in the company, but there are other stockholders who have limited liability. Ben and Jerrys ice cream factory is an example of a a. proprietorship b. partnership c. corporation d. monopoly

4. The principal-agent problem suggests that a. principals and agents always have the same goals. b. principals and agents will never have the same goals. c. principals and agents are more likely to have the same goals if the principal gives the agent flexibility to make his own decisions. d. principals and agents are more likely to have the same goals if the agents pay is tied to satisfying the principals goals.

5. Sue owns a sewing company. The companys total revenue for a month is $4000. The explicit monthly costs are $2000 and implicit monthly costs are $1000. Sues economic profit for the month is equal to a. $4000 b. $3000 c. $2000 d. $1000

6. If the four-firm concentration ratio is a very small number, then a. there is a high degree of competition in the market. b. there is no competition in the market. c. the market must be dominated by a few firms. d. the market is not perfectly competitive.