In What Situation Are the Department of Justice and Federal

question 24

Multiple Choice

In what situation are the Department of Justice and Federal Trade Commission most likely to challenge the merger between two competitors?

• A)When the Herfindahl index is close to 0 and the number of firms is large
• B)When targeted price discounts can be implemented by rival firms
• C)When the merger threatens to substantially increase market concentration
• D)When the merger threatens to substantially decrease market concentration
• E)In a large industry with many competitors, each having a relatively equal market share

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Definitions:

Periodic Inventory System

An inventory accounting system where the inventory is updated in the accounting records periodically, typically at the end of an accounting period, rather than after each transaction.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including material and labor expenses.

Operating Expense

This refers to the costs associated with the normal day-to-day operations of a business, excluding costs directly related to product manufacturing or service delivery.

Merchandising Company

A business entity that purchases and sells tangible goods without significantly altering their form.