Question 1

The FTC is

Accepted Answer

A) the act that prevents producers from driving out smaller competitors by means of selected discriminatory price cuts. 
B) the commission that investigates unfair competitive practices such as misleading advertising. 
C) an agency which has been set up to regulate the federal government. 
D) the agency set up to regulate hospitals. 
A) the act that prevents producers from driving out smaller competitors by means of selected discriminatory price cuts. 
B) the commission that investigates unfair competitive practices such as misleading advertising. 
C) an agency which has been set up to regulate the federal government. 
D) the agency set up to regulate hospitals.

Question 2

The first antitrust law in the United States was the

Accepted Answer

A) Glass-Steagall Act. 
B) Robinson-Patman Act. 
C) Clayton Act. 
D) Sherman Act. 
A) Glass-Steagall Act. 
B) Robinson-Patman Act. 
C) Clayton Act. 
D) Sherman Act.

Question 3

Which of the following is NOT an antitrust law?

Accepted Answer

A) The Robinson-Patman Act 
B) The Smoot-Hawley Act 
C) The FTC Act 
D) The Sherman Act 
A) The Robinson-Patman Act 
B) The Smoot-Hawley Act 
C) The FTC Act 
D) The Sherman Act

Question 4

Suppose technical change makes it cheaper for cable television suppliers to supply their service. The capture theory would predict that the regulators would

Accepted Answer

A) allow the firms to capture the savings and would lower price only if the firms asked them to. 
B) force the firms to pass the savings on to consumers in the form of lower prices. 
C) force the firms to pass the savings on to consumers in the form of better service. 
D) force the firms to pass some of the savings on to consumers and permit them to keep some of the savings for themselves. 
A) allow the firms to capture the savings and would lower price only if the firms asked them to. 
B) force the firms to pass the savings on to consumers in the form of lower prices. 
C) force the firms to pass the savings on to consumers in the form of better service. 
D) force the firms to pass some of the savings on to consumers and permit them to keep some of the savings for themselves.

Question 5

The Federal Trade Commission Act was designed to

Accepted Answer

A) prohibit bundling. 
B) increase foreign trade. 
C) prohibit cutthroat pricing. 
D) limit company profits from foreign sales. 
A) prohibit bundling. 
B) increase foreign trade. 
C) prohibit cutthroat pricing. 
D) limit company profits from foreign sales.

Question 6

Which antitrust act was passed to protect independent retailers from "unfair discrimination" by chain stores?

Accepted Answer

A) Federal Trade Commission Act 
B) Robinson-Patman Act 
C) Sherman Act 
D) Wheeler-Lea Act 
A) Federal Trade Commission Act 
B) Robinson-Patman Act 
C) Sherman Act 
D) Wheeler-Lea Act

Question 7

Which of the following mergers would most likely be challenged by the Federal Trade Commission?

Accepted Answer

A) Two restaurants in a large metro area 
B) Two largest wireless service providers in the U.S. wireless communication industry 
C) An automaker and an insurance company 
D) One oil refinery in the U.S. and another oil refinery in Canada 
A) Two restaurants in a large metro area 
B) Two largest wireless service providers in the U.S. wireless communication industry 
C) An automaker and an insurance company 
D) One oil refinery in the U.S. and another oil refinery in Canada

Question 8

In the above figure, if this natural monopolist were forced to use marginal cost pricing, it would sell the product at the price ________.

Accepted Answer

A) A 
B) C 
C) E 
D) F 
A) A 
B) C 
C) E 
D) F

Question 9

Suppose that a regulated industry experiences an increase in the price of inputs used to produce the good. According to the share-the-gains, share-the-pain theory, we would expect

Accepted Answer

A) prices to increase by a little immediately and profits to decrease by a lot. 
B) there will be some increase in price but not immediately. 
C) no increase in price. 
D) a quick increase in price maintains profits in the industry. 
A) prices to increase by a little immediately and profits to decrease by a lot. 
B) there will be some increase in price but not immediately. 
C) no increase in price. 
D) a quick increase in price maintains profits in the industry.

Question 10

According to OSHA standards, the air in the building that John works in is unsafe. The type of regulation that OSHA engages in is known as

Accepted Answer

A) the Federal Register. 
B) social regulation. 
C) the market share test. 
D) economic regulation. 
A) the Federal Register. 
B) social regulation. 
C) the market share test. 
D) economic regulation.

Question 11

Which of the following is NOT a reason for the government to regulate a nonmonopolistic industry?

Accepted Answer

A) To allow firms to achieve the profit maximizing output. 
B) Asymmetric information. 
C) To protect consumer interests. 
D) Market failures. 
A) To allow firms to achieve the profit maximizing output. 
B) Asymmetric information. 
C) To protect consumer interests. 
D) Market failures.

Question 12

If bottled water, soft drinks and juices are included in the definition of the beverage market, then the relevant definition of the market is defined by

Accepted Answer

A) the locations of products that are produced. 
B) the low degrees of substitution between products in the market. 
C) the high degrees of substitution between products in the market. 
D) a low level of competition among firms producing those products. 
A) the locations of products that are produced. 
B) the low degrees of substitution between products in the market. 
C) the high degrees of substitution between products in the market. 
D) a low level of competition among firms producing those products.

Question 13

The law passed by Congress in 1914 that was designed to sharpen or define further the vagueness of the Sherman Act is called

Accepted Answer

A) the Robinson-Patman Act. 
B) the Wheeler-Lea Act. 
C) the Clayton Act. 
D) the Federal Trade Commission Act. 
A) the Robinson-Patman Act. 
B) the Wheeler-Lea Act. 
C) the Clayton Act. 
D) the Federal Trade Commission Act.

Question 14

The antitrust legislation that forbids a company from selling goods on the condition that the purchaser must deal exclusively with that company is the

Accepted Answer

A) Sherman Act. 
B) Robinson-Patman Act. 
C) Fair Trade Commission Act. 
D) Clayton Act. 
A) Sherman Act. 
B) Robinson-Patman Act. 
C) Fair Trade Commission Act. 
D) Clayton Act.

Question 15

The two basic types of government regulation are

Accepted Answer

A) regulation of natural monopolies and regulation of cartels. 
B) economic regulation and industry regulation. 
C) social regulation and labor law. 
D) social regulation and economic regulation. 
A) regulation of natural monopolies and regulation of cartels. 
B) economic regulation and industry regulation. 
C) social regulation and labor law. 
D) social regulation and economic regulation.

Question 16

Which of the following defines monopolization?

Accepted Answer

A) The Securities and Exchange Commission 
B) The Federal Reserve 
C) U.S. Supreme Court 
D) Federal Trade Commission Act 
A) The Securities and Exchange Commission 
B) The Federal Reserve 
C) U.S. Supreme Court 
D) Federal Trade Commission Act

Question 17

Cab drivers operating from JFK Airport to the City of New York legally must charge a specific fare. This is an example of

Accepted Answer

A) social regulation. 
B) economic regulation. 
C) the market share test. 
D) the rate of return test. 
A) social regulation. 
B) economic regulation. 
C) the market share test. 
D) the rate of return test.

Question 18

This agency is responsible for preventing businesses from engaging in misleading advertising, unfair trade practices, and monopolistic actions, as well as for protecting consumer rights.

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 19

All of the following are possible criticisms of social regulation EXCEPT

Accepted Answer

A) that the costs may outweigh the benefits. 
B) that social regulation may create anticompetitive effects. 
C) that the regulations have not resulted in safer working conditions. 
D) that the regulations lead to higher production costs. 
A) that the costs may outweigh the benefits. 
B) that social regulation may create anticompetitive effects. 
C) that the regulations have not resulted in safer working conditions. 
D) that the regulations lead to higher production costs.

Question 20

When a regulator is concerned about pleasing different groups in order to keep employed, this is known as 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.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

The FTC is

The first antitrust law in the United States was the

Which of the following is NOT an antitrust law?

Suppose technical change makes it cheaper for cable television suppliers to supply their service. The capture theory would predict that the regulators would

The Federal Trade Commission Act was designed to

Which antitrust act was passed to protect independent retailers from "unfair discrimination" by chain stores?

Which of the following mergers would most likely be challenged by the Federal Trade Commission?

In the above figure, if this natural monopolist were forced to use marginal cost pricing, it would sell the product at the price ________.

Suppose that a regulated industry experiences an increase in the price of inputs used to produce the good. According to the share-the-gains, share-the-pain theory, we would expect

According to OSHA standards, the air in the building that John works in is unsafe. The type of regulation that OSHA engages in is known as

Which of the following is NOT a reason for the government to regulate a nonmonopolistic industry?

If bottled water, soft drinks and juices are included in the definition of the beverage market, then the relevant definition of the market is defined by

The law passed by Congress in 1914 that was designed to sharpen or define further the vagueness of the Sherman Act is called

The antitrust legislation that forbids a company from selling goods on the condition that the purchaser must deal exclusively with that company is the

The two basic types of government regulation are

Which of the following defines monopolization?

Cab drivers operating from JFK Airport to the City of New York legally must charge a specific fare. This is an example of

This agency is responsible for preventing businesses from engaging in misleading advertising, unfair trade practices, and monopolistic actions, as well as for protecting consumer rights.

All of the following are possible criticisms of social regulation EXCEPT

When a regulator is concerned about pleasing different groups in order to keep employed, this is known as the

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

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