Question 1

One of the elements of monopolization is

Accepted Answer

A) having a monopoly. 
B) wanting to be a monopoly and wanting to earn monopoly profits. 
C) monopoly pricing. 
D) the willful acquisition of monopoly power. 
A) having a monopoly. 
B) wanting to be a monopoly and wanting to earn monopoly profits. 
C) monopoly pricing. 
D) the willful acquisition of monopoly power.

Question 2

The hypothesis that regulators eventually are controlled by the regulated firms and their special interests is the

Accepted Answer

A) share-the-gains, share-the-pains hypothesis. 
B) capture hypothesis. 
C) public interest theory. 
D) control-group hypothesis. 
A) share-the-gains, share-the-pains hypothesis. 
B) capture hypothesis. 
C) public interest theory. 
D) control-group hypothesis.

Question 3

When a regulator allows a monopolist to set its price equal to long-run average cost, the regulator is practicing

Accepted Answer

A) marginal cost pricing. 
B) operating cost pricing. 
C) average cost pricing. 
D) optimal cost pricing. 
A) marginal cost pricing. 
B) operating cost pricing. 
C) average cost pricing. 
D) optimal cost pricing.

Question 4

The regulation of the prices charged by insurance companies 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 5

Which of the following is exempt from antitrust laws?

Accepted Answer

A) Professional football 
B) Petroleum companies 
C) Airlines 
D) Hospitals 
A) Professional football 
B) Petroleum companies 
C) Airlines 
D) Hospitals

Question 6

An automobile manufacturer voluntarily recalls certain models to fix a defective part at no cost to the owners. This action has the effect of

Accepted Answer

A) the lemon problem. 
B) a manufacturer's warranty. 
C) a market failure. 
D) none of the above 
A) the lemon problem. 
B) a manufacturer's warranty. 
C) a market failure. 
D) none of the above

Question 7

When companies sell slightly different forms of a product to different groups of customers, this is known as

Accepted Answer

A) market testing. 
B) editions. 
C) adaptations. 
D) versioning. 
A) market testing. 
B) editions. 
C) adaptations. 
D) versioning.

Question 8

-Natural monopolies

Accepted Answer

A) have one lowest-cost producer in an industry. 
B) are not regulated. 
C) have long-run average costs equal to zero. 
D) do not experience economies of scale. 
A) have one lowest-cost producer in an industry. 
B) are not regulated. 
C) have long-run average costs equal to zero. 
D) do not experience economies of scale.

Question 9

A regulated natural monopolist allowed to earn a "fair" rate of return would produce to the point at which

Accepted Answer

A) P = LAC. 
B) MR = LAC. 
C) MR = MC. 
D) P = MR. 
A) P = LAC. 
B) MR = LAC. 
C) MR = MC. 
D) P = MR.

Question 10

-If a regulator forced a natural monopolist to set P = MC,

Accepted Answer

A) the monopolist would earn economic profits. 
B) the monopolist would suffer economic losses. 
C) the monopolist would break even. 
D) the monopolist would earn monopolistic profits. 
A) the monopolist would earn economic profits. 
B) the monopolist would suffer economic losses. 
C) the monopolist would break even. 
D) the monopolist would earn monopolistic profits.

Question 11

All of the following are exempt from antitrust lawsuits EXCEPT

Accepted Answer

A) labor unions. 
B) professional baseball. 
C) public transportation. 
D) software developers. 
A) labor unions. 
B) professional baseball. 
C) public transportation. 
D) software developers.

Question 12

Which antitrust law is sometimes called the "Chain Store Act"?

Accepted Answer

A) Sherman Act 
B) Clayton Act 
C) Robinson-Patman Act 
D) Federal Trade Act 
A) Sherman Act 
B) Clayton Act 
C) Robinson-Patman Act 
D) Federal Trade Act

Question 13

Regulation of monopolies that allows prices to reflect only the actual cost of production and no monopoly profits is referred to as

Accepted Answer

A) cost-of-service regulation. 
B) rate-of-return regulation. 
C) service-opportunity regulation. 
D) natural regulation. 
A) cost-of-service regulation. 
B) rate-of-return regulation. 
C) service-opportunity regulation. 
D) natural regulation.

Question 14

Antitrust laws in the United States

Accepted Answer

A) are an attempt to foster competition. 
B) are not necessary in the twenty-first century. 
C) have not been used in the past twenty-five years. 
D) are the same as the laws in the European Union. 
A) are an attempt to foster competition. 
B) are not necessary in the twenty-first century. 
C) have not been used in the past twenty-five years. 
D) are the same as the laws in the European Union.

Question 15

Regulation that keeps the rate of return in the industry competitive is known as

Accepted Answer

A) rate-of-return regulation. 
B) cost-of-service regulation. 
C) social regulation. 
D) deregulation. 
A) rate-of-return regulation. 
B) cost-of-service regulation. 
C) social regulation. 
D) deregulation.

Question 16

The notion that regulated industry members themselves, sooner or later, are able to control regulatory bodies is referred to as

Accepted Answer

A) consumerism. 
B) cartelization. 
C) the capture theory. 
D) the control theory. 
A) consumerism. 
B) cartelization. 
C) the capture theory. 
D) the control theory.

Question 17

Enforcement of antitrust policy is the responsibility of

Accepted Answer

A) the Trust Division of Congress and the World Trade Organization. 
B) the Federal Trade Commission and the Antitrust Division of the Department of Justice. 
C) the World Trade Organization and the FDA. 
D) the Food and Drug Administration and Congress. 
A) the Trust Division of Congress and the World Trade Organization. 
B) the Federal Trade Commission and the Antitrust Division of the Department of Justice. 
C) the World Trade Organization and the FDA. 
D) the Food and Drug Administration and Congress.

Question 18

Section 1 of the Sherman Antitrust Act makes it illegal to

Accepted Answer

A) form a monopolistically competitive firm. 
B) restrain trade. 
C) price discriminate. 
D) have an oligopoly. 
A) form a monopolistically competitive firm. 
B) restrain trade. 
C) price discriminate. 
D) have an oligopoly.

Question 19

In some cases, social regulation may alter individuals' behavior. For example, there is evidence to indicate that as more automobile safety regulations have been introduced, more individuals have begun to drive recklessly. This phenomenon is known as

Accepted Answer

A) the feedback effect. 
B) the share-the-gains effect. 
C) the share-the-pains effect. 
D) the capture effect. 
A) the feedback effect. 
B) the share-the-gains effect. 
C) the share-the-pains effect. 
D) the capture effect.

Question 20

-Refer to the above figure. What are the price and quantity if this monopolist is required to use average cost pricing?

Accepted Answer

A)    ,   
B)    ,   
C)    ,   
D)    ,   
A)    ,   
B)    ,   
C)    ,   
D)    ,

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

One of the elements of monopolization is

The hypothesis that regulators eventually are controlled by the regulated firms and their special interests is the

When a regulator allows a monopolist to set its price equal to long-run average cost, the regulator is practicing

The regulation of the prices charged by insurance companies is known as

Which of the following is exempt from antitrust laws?

An automobile manufacturer voluntarily recalls certain models to fix a defective part at no cost to the owners. This action has the effect of

When companies sell slightly different forms of a product to different groups of customers, this is known as

-Natural monopolies

A regulated natural monopolist allowed to earn a "fair" rate of return would produce to the point at which

-If a regulator forced a natural monopolist to set P = MC,

All of the following are exempt from antitrust lawsuits EXCEPT

Which antitrust law is sometimes called the "Chain Store Act"?

Regulation of monopolies that allows prices to reflect only the actual cost of production and no monopoly profits is referred to as

Antitrust laws in the United States

Regulation that keeps the rate of return in the industry competitive is known as

The notion that regulated industry members themselves, sooner or later, are able to control regulatory bodies is referred to as

Enforcement of antitrust policy is the responsibility of

Section 1 of the Sherman Antitrust Act makes it illegal to

In some cases, social regulation may alter individuals' behavior. For example, there is evidence to indicate that as more automobile safety regulations have been introduced, more individuals have begun to drive recklessly. This phenomenon is known as

-Refer to the above figure. What are the price and quantity if this monopolist is required to use average cost pricing?

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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