Author Question: Holey Doughnuts and Clair's Eclairs want to merge. Each has 2 percent of the local pastry market. It ... (Read 46 times)

lbcchick · **on:** Jun 30, 2018

Holey Doughnuts and Clair's Eclairs want to merge. Each has 2 percent of the local pastry market. It is most likely that
a. the Department of Justice would challenge the merger but the Federal Trade Commission would not
b. the Federal Trade Commission would challenge the merger but the Department of Justice would not
c. the merger will go unchallenged because it will not tend to reduce competition
d. the government will successfully challenge the merger because it is a horizontal merger
e. the government will successfully challenge the merger because it is a vertical merger

Question 2

In an increasing-cost industry, the entry of new firms
a. decreases equilibrium price
b. increases average cost at each level of output
c. shifts the industry demand curve to the left
d. increases economic profits in the industry
e. shifts the long-run industry supply curve to the right