Question 1

A potential benefit that comes from social regulations would be

Accepted Answer

A) higher costs. 
B) a cleaner environment. 
C) higher tax collections. 
D) more layoffs. 
A) higher costs. 
B) a cleaner environment. 
C) higher tax collections. 
D) more layoffs.

Question 2

What is the lemons problem? How do firms try to address this problem?

Accepted Answer

The lemons problem occurs when asymmetri

Question 3

-In the above figure, what would be the profit or loss at the marginal cost pricing point for this natural monopolist?

Accepted Answer

A) -$300 
B) $2,700 
C) $2,100 
D) -$1,200 
A) -$300 
B) $2,700 
C) $2,100 
D) -$1,200

Question 4

When the fox is guarding the henhouse, that is an example of the

Accepted Answer

A) share-the-gains, share-the-pains theory. 
B) regulatory hypothesis. 
C) capture hypothesis. 
D) creative theory. 
A) share-the-gains, share-the-pains theory. 
B) regulatory hypothesis. 
C) capture hypothesis. 
D) creative theory.

Question 5

This agency is responsible for investigating complaints of discrimination based on race, religion, sex or age in hiring, promotion, firing, wages, testing, and all other conditions of employment.

Accepted Answer

A) Environmental Protection Agency 
B) Food and Drug Administration 
C) Equal Employment Opportunity Commission 
D) Federal Trade Commission 
A) Environmental Protection Agency 
B) Food and Drug Administration 
C) Equal Employment Opportunity Commission 
D) Federal Trade Commission

Question 6

If antitrust legislation is successful, then

Accepted Answer

A) firms will produce the quantity at which marginal cost equals marginal revenue. 
B) most firms will be earning a positive economic profit. 
C) the price of each item will equal its marginal social opportunity costs. 
D) natural monopoly will be eliminated. 
A) firms will produce the quantity at which marginal cost equals marginal revenue. 
B) most firms will be earning a positive economic profit. 
C) the price of each item will equal its marginal social opportunity costs. 
D) natural monopoly will be eliminated.

Question 7

-One type of economic regulation often used in the United States by various public utility commissions allows prices to reflect only the actual cost of production and no monopoly profits. This type of economic regulation is known as

Accepted Answer

A) rate-of-return regulation. 
B) cost-of-service regulation. 
C) price per constant-quality-unit regulation. 
D) creative response regulation. 
A) rate-of-return regulation. 
B) cost-of-service regulation. 
C) price per constant-quality-unit regulation. 
D) creative response regulation.

Question 8

For a firm to be economically efficient from society's point of view, it should produce to the point at which

Accepted Answer

A) marginal cost equals marginal revenue. 
B) marginal cost equals average total cost. 
C) marginal cost equals price. 
D) average total cost equals price. 
A) marginal cost equals marginal revenue. 
B) marginal cost equals average total cost. 
C) marginal cost equals price. 
D) average total cost equals price.

Question 9

The two basic types of government regulation are

Accepted Answer

A) monopoly and oligopoly regulation. 
B) labor and environmental regulation. 
C) federal and state industrial regulation. 
D) economic and social regulation. 
A) monopoly and oligopoly regulation. 
B) labor and environmental regulation. 
C) federal and state industrial regulation. 
D) economic and social regulation.

Question 10

Which of the following federal agencies is engaged in economic regulation?

Accepted Answer

A) Occupational Safety and Health Administration 
B) Federal Motor Carrier Safety Administration 
C) Food and Drug Administration 
D) Consumer Product Safety Commission 
A) Occupational Safety and Health Administration 
B) Federal Motor Carrier Safety Administration 
C) Food and Drug Administration 
D) Consumer Product Safety Commission

Question 11

The Supreme Court has defined the offense of monopolization as involving all of the following elements EXCEPT

Accepted Answer

A) the possession of monopoly power in the relevant market. 
B) the willful acquisition of monopoly power. 
C) the ability to grow a business as a consequence of a superior product. 
D) the maintenance of monopoly power. 
A) the possession of monopoly power in the relevant market. 
B) the willful acquisition of monopoly power. 
C) the ability to grow a business as a consequence of a superior product. 
D) the maintenance of monopoly power.

Question 12

-Refer to the above figure. If the government requires the natural monopolist to charge the efficient price, it will charge price

Accepted Answer

A)    and sell   units. 
B)    and sell   units. 
C)    and sell   units. 
D)    and sell   units. 
A)    and sell   units. 
B)    and sell   units. 
C)    and sell   units. 
D)    and sell   units.

Question 13

A creative response to regulations can be described as

Accepted Answer

A) conforming to the letter of the law but undermining its spirit. 
B) totally conforming to the law. 
C) completely ignoring the law. 
D) none of the above. 
A) conforming to the letter of the law but undermining its spirit. 
B) totally conforming to the law. 
C) completely ignoring the law. 
D) none of the above.

Question 14

As a result of a conviction under the Sherman Antitrust Act, Standard Oil of New Jersey

Accepted Answer

A) was fined for its extensive price discriminating activity. 
B) was restrained from oil exploration for twenty-five years, which enabled other oil firms to assume leadership in the industry. 
C) was broken up into many smaller companies. 
D) went bankrupt and no longer is in existence. 
A) was fined for its extensive price discriminating activity. 
B) was restrained from oil exploration for twenty-five years, which enabled other oil firms to assume leadership in the industry. 
C) was broken up into many smaller companies. 
D) went bankrupt and no longer is in existence.

Question 15

A common feature of regulated industries is cross-subsidization, which is a situation when one group of customers pays prices above costs while another group of customers pays prices below costs. The one group is subsidizing the other group. Is this practice more consistent with the capture hypothesis or the share-the-gains, share-the-pains theory? Explain.

Accepted Answer

Cross-subsidization is more consistent w

Question 16

"Regulations do not always have the intended result." Do you agree or disagree? Why?

Accepted Answer

Agree. Firms often try to avoid the effe

Question 17

Which of the statements best describes the difference between economic regulation and social regulation?

Accepted Answer

A) There are no significant differences between economic and social regulation, social regulation is a more modern way of regulating an economy. 
B) Economic regulation focuses on output and price; social regulation focuses on improving the quality of life. 
C) Social regulation focuses on output and price; economic regulation focuses on quality of life issues. 
D) Social regulation targets industries like transportation, while economic regulation targets utilities. 
A) There are no significant differences between economic and social regulation, social regulation is a more modern way of regulating an economy. 
B) Economic regulation focuses on output and price; social regulation focuses on improving the quality of life. 
C) Social regulation focuses on output and price; economic regulation focuses on quality of life issues. 
D) Social regulation targets industries like transportation, while economic regulation targets utilities.

Question 18

The potential for a decline in product quality due to asymmetric information is commonly referred to as

Accepted Answer

A) the lemons problem. 
B) planned obsolescence. 
C) diminishing marginal product. 
D) the externality problem. 
A) the lemons problem. 
B) planned obsolescence. 
C) diminishing marginal product. 
D) the externality problem.

Question 19

The act of offering two or more products for sale as a set is called

Accepted Answer

A) bundling. 
B) versioning. 
C) tie-in sales. 
D) branding. 
A) bundling. 
B) versioning. 
C) tie-in sales. 
D) branding.

Question 20

According to the Justice Department and the Federal Trade Commission, a merger would likely be challenged if

Accepted Answer

A) the post-merger industry has an HHI above 1,000 and the HHI rises by more than 100. 
B) the post-merger industry has an HHI above 500 and the HHI rises by more than 50. 
C) the number of firms in the post-merger industry is very large. 
D) the firms' markets are very large. 
A) the post-merger industry has an HHI above 1,000 and the HHI rises by more than 100. 
B) the post-merger industry has an HHI above 500 and the HHI rises by more than 50. 
C) the number of firms in the post-merger industry is very large. 
D) the firms' markets are very large.

A potential benefit that comes from social regulations would be

What is the lemons problem? How do firms try to address this problem?

-In the above figure, what would be the profit or loss at the marginal cost pricing point for this natural monopolist?

When the fox is guarding the henhouse, that is an example of the

This agency is responsible for investigating complaints of discrimination based on race, religion, sex or age in hiring, promotion, firing, wages, testing, and all other conditions of employment.

If antitrust legislation is successful, then

-One type of economic regulation often used in the United States by various public utility commissions allows prices to reflect only the actual cost of production and no monopoly profits. This type of economic regulation is known as

For a firm to be economically efficient from society's point of view, it should produce to the point at which

The two basic types of government regulation are

Which of the following federal agencies is engaged in economic regulation?

The Supreme Court has defined the offense of monopolization as involving all of the following elements EXCEPT

-Refer to the above figure. If the government requires the natural monopolist to charge the efficient price, it will charge price

A creative response to regulations can be described as

As a result of a conviction under the Sherman Antitrust Act, Standard Oil of New Jersey

"Regulations do not always have the intended result." Do you agree or disagree? Why?

Which of the statements best describes the difference between economic regulation and social regulation?

The potential for a decline in product quality due to asymmetric information is commonly referred to as

The act of offering two or more products for sale as a set is called

According to the Justice Department and the Federal Trade Commission, a merger would likely be challenged if

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

A potential benefit that comes from social regulations would be

What is the lemons problem? How do firms try to address this problem?

-In the above figure, what would be the profit or loss at the marginal cost pricing point for this natural monopolist?

When the fox is guarding the henhouse, that is an example of the

This agency is responsible for investigating complaints of discrimination based on race, religion, sex or age in hiring, promotion, firing, wages, testing, and all other conditions of employment.

If antitrust legislation is successful, then

-One type of economic regulation often used in the United States by various public utility commissions allows prices to reflect only the actual cost of production and no monopoly profits. This type of economic regulation is known as

For a firm to be economically efficient from society's point of view, it should produce to the point at which

The two basic types of government regulation are

Which of the following federal agencies is engaged in economic regulation?

The Supreme Court has defined the offense of monopolization as involving all of the following elements EXCEPT

-Refer to the above figure. If the government requires the natural monopolist to charge the efficient price, it will charge price

A creative response to regulations can be described as

As a result of a conviction under the Sherman Antitrust Act, Standard Oil of New Jersey

"Regulations do not always have the intended result." Do you agree or disagree? Why?

Which of the statements best describes the difference between economic regulation and social regulation?

The potential for a decline in product quality due to asymmetric information is commonly referred to as

The act of offering two or more products for sale as a set is called

According to the Justice Department and the Federal Trade Commission, a merger would likely be challenged if

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters