Exam 12: Antitrust Policy and Regulation

Exhibit 12-1 -Exhibit 12-1 shows the market shares of eight firms in an industry. Which of the following mergers would most likely be challenged by the U.S. Department of Justice?

An unregulated natural monopoly

Zenith lost, and Matsushita and other Japanese companies won, a 1986 Supreme Court predatory pricing decision because

Lawsuits against alleged price fixers can be brought

Government actions designed to promote competition among firms are called

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

Cable television

What is the name of the antitrust case standard that requires a court to consider the rationale for the offending practice and its effect on competition?

When a court uses the rule of reason to interpret the Sherman Antitrust Act, its ruling is based on a firm's market share alone.

In a natural monopoly, long-run average total cost decreases as output increases.

Since 1890, the government has ordered the breakup of

The Herfindahl-Hirschman index rises as concentration in an industry falls.

A firm's action to set a price below its shutdown point with the intent to drive a competitor out of business is called

Breaking up a natural monopoly into a number of smaller firms

If the value of the Herfindahl-Hirschman index is 10,000, then there must be a monopoly in the industry.

The table below shows the market shares of firms in three different industries.

Deregulation is the

Antitrust policy aims at restoring confidence in government.

A 1945 Supreme Court decision found Alcoa Aluminum guilty of monopolization.

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