Micro Exam 2

  1. What are the legal types of businesses in our economy?  Which ones are the most influential in terms of revenues?
    Sole Proprietorship, Partnership, Corporation, and Cooperative. Corporation makes up for 81% of all Bus Receipts.
  2. What are the four industry models used to analyze American Industry?
    Pure Competition (PC), Monopolistic Competition (MC), Oligopoly (O), and Pure Monopoly (PM)
  3. Computations (TR, TC, MR, MC, AVC, and ATC)
    • PxQD=TR
    • ΔTR/ΔQ=MR
    • FC+VC=TC
    • TR-TC=Profits or Loss
    • VC/Q=AVC
    • TC/Q=ATC
    • ΔTC/ΔQ=MC
  4. At what point (output level) do the firms in each industry maximize their profits?
    where MR=MC
  5. Which types of firms are most likely to get involved  in price discrimination?  Collusion?
    PM, O
  6. In general, did U.S. industries become more competitive or more concentrated from 1900 to 1990?
    From 1900 to 1990 they were more competitive, from 1990 to today they are more concentrated
  7. How is industry concentration measured numerically by Concentration Ratios or the Herfindahl Index?
    • Sum of the market shares of the 4 or 8 largest firms in an industry.
    • Higher-More concentrated industry
    • Lower-More Competitive Industry
  8. The concentration  of U.S. industry from 1900 to 1990 can also be assessed  historically from four waves of heavy merger activity.  What are the types of mergers that occurred during these four waves?
    • Horizontal Mergers(1895-1905)-Same Industry
    • Vertical Mergers(1916-1929)-Related Industries
    • Conglomerate Mergers(1957-1967)-Different Industries
    • All of the Above(1978-1990)
  9. What major Antitrust laws exist to help protect consumers against potential abuses of firms in concentrated industries?
    Sherman Act(1990) Prohibits Collusion through(Contracts, Combinations, and Conspiracies in restraint of trade)

    Clayton Act(1914)-Prohibits price discrimination, tying agreements, interlocking directories,etc)
Card Set
Micro Exam 2