Question

1. The Herfindahl-Hirschmann Index (HHI) addresses which question that is not indicated by the concentration ratio?

		how market share is distributed by firms within the concentration ratio
		how market share is distributed across a larger number of firms
		the extent to which market dominance is being exercised by firms in an industry
		the extent to which government involvement is limited price setting by firms
		the extent to which the market is preventing price manipulation by firms

1. Which of the following best exemplifies regulatory capture, or the capture theory of regulation?

		Banks write the laws that will be enacted in an effort to govern the financial industry
		A pollution tax is enacted to internalize a negative externality
		Both negative and positive externalities are internalized or negated
		Homeowners are forced to pay an additional tax in order to support a public park in their area
		None of the above

1. A cartel may result from which of the following?

		Producer Cooperation Agreements (PCAs) in a perfectly competitive market
		PCAs in a Producer Premium Market
		The utilization of PCAs to eliminate producer surpluses
		Inelastic consumer demand across an industry
		collusion among firms in an oligopolistic market

1. Which of the following is most likely true of your business strategy if you decide to open a small local theater?

		You will need to get the top movies to compete directly with the theater chains
		You will not be able to succeed due to barriers to entry
		You will likely look to run independent films or otherwise avoid directly competing with theater chains
		Barriers to entry will be your best chance of achieving economic success
		Antitrust laws will probably prevent you from doing so in order to preserve the market status of your competitors

Answer 1