Question 1

A regulatory authority might require a monopoly to use marginal cost pricing because marginal cost pricing

Accepted Answer

A) lowers but does not eliminate deadweight loss to society. 
B) does not change deadweight loss to society. 
C) eliminates any deadweight loss to society. 
D) minimizes the total cost of a natural monopoly. 
E) increases deadweight loss to society. 
A) lowers but does not eliminate deadweight loss to society. 
B) does not change deadweight loss to society. 
C) eliminates any deadweight loss to society. 
D) minimizes the total cost of a natural monopoly. 
E) increases deadweight loss to society.

Question 2

Regulation of a natural monopoly could give an economy the advantages of

Accepted Answer

A) one-firm efficiency without competition-like behavior. 
B) competition-like behavior but not one-firm efficiency. 
C) one-firm efficiency and competition-like behavior. 
D) neither one-firm efficiency nor competition-like behavior. 
E) dealing with only one firm rather than many firms as in perfect competition. 
A) one-firm efficiency without competition-like behavior. 
B) competition-like behavior but not one-firm efficiency. 
C) one-firm efficiency and competition-like behavior. 
D) neither one-firm efficiency nor competition-like behavior. 
E) dealing with only one firm rather than many firms as in perfect competition.

Question 3

Economists who complain about airline deregulation say that

Accepted Answer

A) there is too much competition in large regional airline hubs. 
B) fares have increased on all major routes in the country. 
C) it has reduced competition between St.Louis and Kansas City. 
D) rural areas no longer receive the service they previously received. 
E) the increased number of planes in the sky is unsafe. 
A) there is too much competition in large regional airline hubs. 
B) fares have increased on all major routes in the country. 
C) it has reduced competition between St.Louis and Kansas City. 
D) rural areas no longer receive the service they previously received. 
E) the increased number of planes in the sky is unsafe.

Question 4

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 5

If a group of firms in a particular category of goods all change their quantity sold by 1 percent and revenues change significantly, then the firms constitute a market.

Accepted Answer

A) True 
 B)False

Question 6

Regarding the provision of a public utility like water,

Accepted Answer

A) many small firms can deliver the water to households most efficiently. 
B) a state-owned firm can deliver the water to households most efficiently. 
C) two firms can deliver the water to households most efficiently. 
D) a few large firms can deliver the water to households most efficiently. 
E) one firm can deliver the water to households most efficiently. 
A) many small firms can deliver the water to households most efficiently. 
B) a state-owned firm can deliver the water to households most efficiently. 
C) two firms can deliver the water to households most efficiently. 
D) a few large firms can deliver the water to households most efficiently. 
E) one firm can deliver the water to households most efficiently.

Question 7

When a firm uses average total cost pricing,

Accepted Answer

A) above-normal profits are made. 
B) economic profits equal zero. 
C) there is not enough money to pay investors in the firm their opportunity costs. 
D) price equals marginal cost. 
E) there is not enough money to pay the managers. 
A) above-normal profits are made. 
B) economic profits equal zero. 
C) there is not enough money to pay investors in the firm their opportunity costs. 
D) price equals marginal cost. 
E) there is not enough money to pay the managers.

Question 8

Which of the following is one method by which the government can regulate the price charged by a natural monopoly?

Accepted Answer

A) Making marginal cost equal to marginal revenue pricing 
B) Setting prices for a period and then allowing the firm to keep any profits made over that period 
C) Average variable cost pricing 
D) Threatening to shut down the firm 
E) Fixed cost pricing 
A) Making marginal cost equal to marginal revenue pricing 
B) Setting prices for a period and then allowing the firm to keep any profits made over that period 
C) Average variable cost pricing 
D) Threatening to shut down the firm 
E) Fixed cost pricing

Question 9

Antitrust policy includes all of the following except

Accepted Answer

A)  and breaking up existing firms with significant market power. 
B) preventing mergers that would increase monopoly power significantly. 
C) limiting competitive arrangements between firms and their suppliers. 
D) prohibiting price fixing. 
E) prohibiting collusion. 
A)  and breaking up existing firms with significant market power. 
B) preventing mergers that would increase monopoly power significantly. 
C) limiting competitive arrangements between firms and their suppliers. 
D) prohibiting price fixing. 
E) prohibiting collusion.

Question 10

A merger of firms with low price-cost margins is less likely to be challenged by the Federal Trade Commission.

Accepted Answer

A) True 
 B)False

Question 11

Marginal cost pricing is a regulatory method that stipulates that the firm charge a price equal to

Accepted Answer

A) deadweight loss. 
B) marginal cost. 
C) average cost. 
D) marginal revenue. 
E) fixed cost. 
A) deadweight loss. 
B) marginal cost. 
C) average cost. 
D) marginal revenue. 
E) fixed cost.

Question 12

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.

Exam 12: Antitrust Policy and Regulation

A regulatory authority might require a monopoly to use marginal cost pricing because marginal cost pricing

Regulation of a natural monopoly could give an economy the advantages of

Economists who complain about airline deregulation say that

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

If a group of firms in a particular category of goods all change their quantity sold by 1 percent and revenues change significantly, then the firms constitute a market.

Regarding the provision of a public utility like water,

When a firm uses average total cost pricing,

Which of the following is one method by which the government can regulate the price charged by a natural monopoly?

Antitrust policy includes all of the following except

A merger of firms with low price-cost margins is less likely to be challenged by the Federal Trade Commission.

Marginal cost pricing is a regulatory method that stipulates that the firm charge a price equal to

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

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of 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

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters