Question 1

A possible explanation for government price controls is that they

Accepted Answer

A)  reflect the preferences of the consuming public. 
B)  benefit society. 
C)  benefit those with the greatest need. 
D)  permit some firms with political power to benefit, at a cost to society. 
E)  increase economic efficiency. 
A)  reflect the preferences of the consuming public. 
B)  benefit society. 
C)  benefit those with the greatest need. 
D)  permit some firms with political power to benefit, at a cost to society. 
E)  increase economic efficiency.

Question 2

Suppose that all the auto repair shops in an isolated town agree to increase the price of their services. Is this illegal? Why?

Accepted Answer

This is an example of price-fixing, whic

Question 3

The government agency that is partially responsible for competition policy in the United States is the

Accepted Answer

A)  Department of Commerce. 
B)  Treasury Department. 
C)  Congressional Budget Office. 
D)  Antitrust Division of the Justice Department. 
E)  Federal Reserve System. 
A)  Department of Commerce. 
B)  Treasury Department. 
C)  Congressional Budget Office. 
D)  Antitrust Division of the Justice Department. 
E)  Federal Reserve System.

Question 4

Deregulation of an industry is applied mainly to increase market competition.

Accepted Answer

A) True 
 B)False

Question 5

How does the government decide whether a merger by firms reduces competition in the market?

Accepted Answer

Government economists and lawyers focus

Question 6

When a firm uses average total cost pricing, the price is

Accepted Answer

A)  equal to marginal cost. 
B)  below the firm's marginal cost. 
C)  below the unregulated monopoly price. 
D)  equal to the unregulated monopoly price. 
E)  above the unregulated monopoly price. 
A)  equal to marginal cost. 
B)  below the firm's marginal cost. 
C)  below the unregulated monopoly price. 
D)  equal to the unregulated monopoly price. 
E)  above the unregulated monopoly price.

Question 7

Which two products most likely will have market structures that are natural monopolies?

Accepted Answer

A)  Computers and natural gas 
B)  Automobiles and cable television 
C)  Groceries and toys 
D)  Airplanes and ships 
E)  Water and electricity 
A)  Computers and natural gas 
B)  Automobiles and cable television 
C)  Groceries and toys 
D)  Airplanes and ships 
E)  Water and electricity

Question 8

A business practice is deemed illegal under the per se rule when the court decision is made without regard to the practice's economic rationale or consequences.

Accepted Answer

A) True 
 B)False

Question 9

The antitrust case standard that holds that it is necessary only to show that an action occurred, not that there was intent or significant impact, is called the

Accepted Answer

A)  rule of reason. 
B)  antimonopoly rule. 
C)  predatory pricing rule. 
D)  per se rule. 
E)  antidiscrimination. 
A)  rule of reason. 
B)  antimonopoly rule. 
C)  predatory pricing rule. 
D)  per se rule. 
E)  antidiscrimination.

Question 10

Lawsuits against alleged price fixers can claim treble damages.

Accepted Answer

A) True 
 B)False

Question 11

The demand schedule and total costs for a natural monopoly are given in the table below.

Accepted Answer

The answer of The demand schedule and total costs for...

Question 12

What are the major advantage and the major disadvantage of a regulatory method that stipulates that a natural monopoly charge a price equal to marginal cost?

Accepted Answer

When price is equal to marginal cost, th

Question 13

To allow a natural monopoly to earn only a normal profit, the government should set

Accepted Answer

A)  price equal to marginal cost. 
B)  price equal to average total cost. 
C)  price equal to average fixed cost. 
D)  average revenue equal to marginal cost. 
E)  marginal revenue equal to marginal cost. 
A)  price equal to marginal cost. 
B)  price equal to average total cost. 
C)  price equal to average fixed cost. 
D)  average revenue equal to marginal cost. 
E)  marginal revenue equal to marginal cost.

Question 14

When regulators become captives of industry, they may

Accepted Answer

A)  increase economic efficiency in the market. 
B)  support firms that resist demands for wage increases. 
C)  increase competition in an industry. 
D)  help a firm reallocate out of an industry in which it has losses. 
E)  prevent some firms from failing by keeping their prices high. 
A)  increase economic efficiency in the market. 
B)  support firms that resist demands for wage increases. 
C)  increase competition in an industry. 
D)  help a firm reallocate out of an industry in which it has losses. 
E)  prevent some firms from failing by keeping their prices high.

Question 15

In a natural monopoly,

Accepted Answer

A)  marginal costs follow variable costs. 
B)  total costs are large compared to fixed costs. 
C)  fixed costs are large compared to variable costs. 
D)  variable costs are large compared to fixed costs. 
E)  total costs are small compared to variable costs. 
A)  marginal costs follow variable costs. 
B)  total costs are large compared to fixed costs. 
C)  fixed costs are large compared to variable costs. 
D)  variable costs are large compared to fixed costs. 
E)  total costs are small compared to variable costs.

Question 16

According to the Federal Trade Commission merger guidelines, a merger is likely to be challenged if

Accepted Answer

A)  the HHI after the merger is the same as the HHI before the merger. 
B)  the HHI decreases after the merger. 
C)  the HHI after the merger is above 1,000 and has increased. 
D)  the HHI after the merger is above 1,800 and has increased by 50 points or more. 
E)  the HHI after the merger is above 1,500 and has decreased. 
A)  the HHI after the merger is the same as the HHI before the merger. 
B)  the HHI decreases after the merger. 
C)  the HHI after the merger is above 1,000 and has increased. 
D)  the HHI after the merger is above 1,800 and has increased by 50 points or more. 
E)  the HHI after the merger is above 1,500 and has decreased.

Question 17

Some consider the local cable industry to be a natural monopoly. If the cable industry is under incentive regulation, what would be the effect of introducing competitive satellite TV? What should the cable regulatory agency do?

Accepted Answer

By taking away customers, the competitio

Question 18

Deregulation in the 1980s did not affect which of the following industries?

Accepted Answer

A)  Airlines 
B)  Electric utilities 
C)  Telecommunications 
D)  Trucking 
E)  Banking 
A)  Airlines 
B)  Electric utilities 
C)  Telecommunications 
D)  Trucking 
E)  Banking

Question 19

The Herfindahl-Hirschman index is a measure of

Accepted Answer

A)  market size. 
B)  firm size. 
C)  the degree of firm responsiveness to a change in demand. 
D)  the degree of concentration in a market. 
E)  the degree of collusion among firms in a market. 
A)  market size. 
B)  firm size. 
C)  the degree of firm responsiveness to a change in demand. 
D)  the degree of concentration in a market. 
E)  the degree of collusion among firms in a market.

Question 20

The U.S. government withdrew its antitrust case against IBM in 1982 because

Accepted Answer

A)  the per se standard did not apply to the case. 
B)  IBM agreed to cooperate. 
C)  there was no proof that IBM's mainframe computer profits cross-subsidized its personal computer activity. 
D)  the Supreme Court redefined the rule of reason to make it more difficult to prove guilt. 
E)  competition in computer markets increased rapidly after the case began. 
A)  the per se standard did not apply to the case. 
B)  IBM agreed to cooperate. 
C)  there was no proof that IBM's mainframe computer profits cross-subsidized its personal computer activity. 
D)  the Supreme Court redefined the rule of reason to make it more difficult to prove guilt. 
E)  competition in computer markets increased rapidly after the case began.

A possible explanation for government price controls is that they

Suppose that all the auto repair shops in an isolated town agree to increase the price of their services. Is this illegal? Why?

The government agency that is partially responsible for competition policy in the United States is the

Deregulation of an industry is applied mainly to increase market competition.

How does the government decide whether a merger by firms reduces competition in the market?

When a firm uses average total cost pricing, the price is

Which two products most likely will have market structures that are natural monopolies?

A business practice is deemed illegal under the per se rule when the court decision is made without regard to the practice's economic rationale or consequences.

The antitrust case standard that holds that it is necessary only to show that an action occurred, not that there was intent or significant impact, is called the

Lawsuits against alleged price fixers can claim treble damages.

The demand schedule and total costs for a natural monopoly are given in the table below.

What are the major advantage and the major disadvantage of a regulatory method that stipulates that a natural monopoly charge a price equal to marginal cost?

To allow a natural monopoly to earn only a normal profit, the government should set

When regulators become captives of industry, they may

In a natural monopoly,

According to the Federal Trade Commission merger guidelines, a merger is likely to be challenged if

Some consider the local cable industry to be a natural monopoly. If the cable industry is under incentive regulation, what would be the effect of introducing competitive satellite TV? What should the cable regulatory agency do?

Deregulation in the 1980s did not affect which of the following industries?

The Herfindahl-Hirschman index is a measure of

The U.S. government withdrew its antitrust case against IBM in 1982 because

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Filters

Exam 12: Antitrust Policy and Regulation

A possible explanation for government price controls is that they

Suppose that all the auto repair shops in an isolated town agree to increase the price of their services. Is this illegal? Why?

The government agency that is partially responsible for competition policy in the United States is the

Deregulation of an industry is applied mainly to increase market competition.

How does the government decide whether a merger by firms reduces competition in the market?

When a firm uses average total cost pricing, the price is

Which two products most likely will have market structures that are natural monopolies?

A business practice is deemed illegal under the per se rule when the court decision is made without regard to the practice's economic rationale or consequences.

The antitrust case standard that holds that it is necessary only to show that an action occurred, not that there was intent or significant impact, is called the

Lawsuits against alleged price fixers can claim treble damages.

The demand schedule and total costs for a natural monopoly are given in the table below.

What are the major advantage and the major disadvantage of a regulatory method that stipulates that a natural monopoly charge a price equal to marginal cost?

To allow a natural monopoly to earn only a normal profit, the government should set

When regulators become captives of industry, they may

In a natural monopoly,

According to the Federal Trade Commission merger guidelines, a merger is likely to be challenged if

Some consider the local cable industry to be a natural monopoly. If the cable industry is under incentive regulation, what would be the effect of introducing competitive satellite TV? What should the cable regulatory agency do?

Deregulation in the 1980s did not affect which of the following industries?

The Herfindahl-Hirschman index is a measure of

The U.S. government withdrew its antitrust case against IBM in 1982 because

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Filters