Question 1

Economists who adhere to the laissez-faire antitrust perspective

Accepted Answer

A) view competition as a long-run dynamic process in which firms battle for dominance of markets but rarely can sustain such dominance once it is achieved. 
B) believe the antitrust laws are as important today as they were when they were passed in the early 1900s. 
C) say that an industry's structure, which is based on economies of scale, usually predicts the behavior of the industry firms. 
D) contend that large, dominant firms should be broken into smaller competitive firms and then government should stand back and let competition prevail. 
A) view competition as a long-run dynamic process in which firms battle for dominance of markets but rarely can sustain such dominance once it is achieved. 
B) believe the antitrust laws are as important today as they were when they were passed in the early 1900s. 
C) say that an industry's structure, which is based on economies of scale, usually predicts the behavior of the industry firms. 
D) contend that large, dominant firms should be broken into smaller competitive firms and then government should stand back and let competition prevail.

Question 2

Which of the following is not a major criticism of social regulation?

Accepted Answer

A) It is anticompetitive. 
B) It will increase product prices. 
C) It will increase the rate of innovation in the economy. 
D) It will impose a larger burden on small firms compared to large firms. 
A) It is anticompetitive. 
B) It will increase product prices. 
C) It will increase the rate of innovation in the economy. 
D) It will impose a larger burden on small firms compared to large firms.

Question 3

Critics of industrial regulation say that such regulation

Accepted Answer

A) benefits small firms at the expense of large firms. 
B) perpetuates monopoly long after new technology has eroded natural monopoly. 
C) creates insurmountable principal-agent problems. 
D) has resulted mainly from the paradox of voting. 
A) benefits small firms at the expense of large firms. 
B) perpetuates monopoly long after new technology has eroded natural monopoly. 
C) creates insurmountable principal-agent problems. 
D) has resulted mainly from the paradox of voting.

Question 4

Which of the following statements is true?

Accepted Answer

A) "Behavioralists" believe that all monopolists are "bad" monopolists. 
B) "Structuralists" strongly abide by the "rule of reason" in applying antitrust laws. 
C) "Behavioralists" believe that some monopolists are "good" monopolists. 
D) "Structuralists" believe that some monopolists are "good" monopolists. 
A) "Behavioralists" believe that all monopolists are "bad" monopolists. 
B) "Structuralists" strongly abide by the "rule of reason" in applying antitrust laws. 
C) "Behavioralists" believe that some monopolists are "good" monopolists. 
D) "Structuralists" believe that some monopolists are "good" monopolists.

Question 5

The public interest theory of industrial regulation contends that

Accepted Answer

A) while industrial regulation is sound in theory, bureaucrats allow monopolists to obtain excessive profits. 
B) regulated monopolies are tantamount to legal cartels. 
C) the objective of regulation is to protect the public from the market power inherent in natural monopolies. 
D) firms in some industries want to be regulated. 
A) while industrial regulation is sound in theory, bureaucrats allow monopolists to obtain excessive profits. 
B) regulated monopolies are tantamount to legal cartels. 
C) the objective of regulation is to protect the public from the market power inherent in natural monopolies. 
D) firms in some industries want to be regulated.

Question 6

Where there is natural monopoly, government is most likely to implement

Accepted Answer

A) social regulation. 
B) antitrust policy. 
C) industrial regulation. 
D) an externality containment policy. 
A) social regulation. 
B) antitrust policy. 
C) industrial regulation. 
D) an externality containment policy.

Question 7

The antitrust laws are enforced by the

Accepted Answer

A) Federal Bureau of Investigation. 
B) Antimonopoly Court of Appeals. 
C) Federal Justice Department and the Federal Trade Commission. 
D) Department of Commerce. 
A) Federal Bureau of Investigation. 
B) Antimonopoly Court of Appeals. 
C) Federal Justice Department and the Federal Trade Commission. 
D) Department of Commerce.

Question 8

Government regulation of firms' prices or "rates" in selected industries is the focus of

Accepted Answer

A) social regulation. 
B) industrial regulation. 
C) antitrust policy. 
D) incomes policy. 
A) social regulation. 
B) industrial regulation. 
C) antitrust policy. 
D) incomes policy.

Question 9

The Celler-Kefauver Act of 1950

Accepted Answer

A) outlawed price-fixing. 
B) amended the Sherman Act. 
C) amended the Clayton Act. 
D) created the Civil Aeronautics Board (CA
B) . 
A) outlawed price-fixing. 
B) amended the Sherman Act. 
C) amended the Clayton Act. 
D) created the Civil Aeronautics Board (CA
B) .

Question 10

Conglomerate mergers are combinations of

Accepted Answer

A) many small firms. 
B) firms producing the same product. 
C) firms producing unrelated products. 
D) firms operating at different stages in a given production process. 
A) many small firms. 
B) firms producing the same product. 
C) firms producing unrelated products. 
D) firms operating at different stages in a given production process.

Question 11

(Last Word) What problem is created for antitrust regulators by online pricing algorithms?

Accepted Answer

A) Even if the algorithms produce collusive prices, the lack of an agreement makes it difficult to prosecute under current antitrust law. 
B) The encrypted data does not allow regulators to determine whether prices are converging to a level consistent with collusion. 
C) Online pricing algorithms are programmed to randomly vary prices to prevent antitrust regulators from discovering price-fixing. 
D) Online pricing algorithms are programmed to ensure that there is just enough of a gap between prices across firms that collusion would be impossible to prove. 
A) Even if the algorithms produce collusive prices, the lack of an agreement makes it difficult to prosecute under current antitrust law. 
B) The encrypted data does not allow regulators to determine whether prices are converging to a level consistent with collusion. 
C) Online pricing algorithms are programmed to randomly vary prices to prevent antitrust regulators from discovering price-fixing. 
D) Online pricing algorithms are programmed to ensure that there is just enough of a gap between prices across firms that collusion would be impossible to prove.

Question 12

What is most likely to happen as the output of a natural monopoly increases over the range of market demand?

Accepted Answer

A) There is a small decrease in average total cost and then it increases as output increases. 
B) There is an increase in average total cost and then it decreases as output increases. 
C) Average total cost increases as output increases. 
D) Average total cost decreases as output increases. 
A) There is a small decrease in average total cost and then it increases as output increases. 
B) There is an increase in average total cost and then it decreases as output increases. 
C) Average total cost increases as output increases. 
D) Average total cost decreases as output increases.

Question 13

Which business practice is rarely challenged by the government under antitrust laws?

Accepted Answer

A) price-fixing 
B) tying contracts 
C) price discrimination 
D) interlocking directorates 
A) price-fixing 
B) tying contracts 
C) price discrimination 
D) interlocking directorates

Question 14

Conspiracies to fix prices are

Accepted Answer

A) illegal under the Clayton Act. 
B) illegal under the Celler-Kefauver Act. 
C) per se violations of the antitrust laws. 
D) more tolerated by government today than two or three decades ago. 
A) illegal under the Clayton Act. 
B) illegal under the Celler-Kefauver Act. 
C) per se violations of the antitrust laws. 
D) more tolerated by government today than two or three decades ago.

Question 15

"Behavioralists" in antitrust applications believe that a firm that dominates a market is not necessarily behaving unfairly.

Accepted Answer

A) True 
 B)False

Question 16

One good example of a government agency involved mainly in social regulation is the Food and Drug Administration.

Accepted Answer

A) True 
 B)False

Question 17

The Occupational Safety and Health Administration is mainly involved in

Accepted Answer

A) industrial regulation. 
B) social regulation. 
C) antitrust regulation. 
D) public utility regulation. 
A) industrial regulation. 
B) social regulation. 
C) antitrust regulation. 
D) public utility regulation.

Question 18

If the market is defined more narrowly to include only a more restricted range of products, then the Herfindahl index will

Accepted Answer

A) increase. 
B) decrease. 
C) not be affected. 
D) either increase or decrease. 
A) increase. 
B) decrease. 
C) not be affected. 
D) either increase or decrease.

Question 19

The largest efficiency gains from deregulation have occurred in the

Accepted Answer

A) natural gas and cable television industries. 
B) cable television and railroad industries. 
C) communications and stock-brokering industries. 
D) airlines, trucking, and railroad industries. 
A) natural gas and cable television industries. 
B) cable television and railroad industries. 
C) communications and stock-brokering industries. 
D) airlines, trucking, and railroad industries.

Question 20

Suppose that you own a toy store and want to buy 100 talking robots.Your supplier will sell you the robots only if you also agree to buy 200 dolls.This is an illegal practice called

Accepted Answer

A) monopolistic. 
B) a tying contract. 
C) a cartel. 
D) discriminatory. 
A) monopolistic. 
B) a tying contract. 
C) a cartel. 
D) discriminatory.

Exam 21: Antitrust Policy and Regulation

Economists who adhere to the laissez-faire antitrust perspective

Which of the following is not a major criticism of social regulation?

Critics of industrial regulation say that such regulation

Which of the following statements is true?

The public interest theory of industrial regulation contends that

Where there is natural monopoly, government is most likely to implement

The antitrust laws are enforced by the

Government regulation of firms' prices or "rates" in selected industries is the focus of

The Celler-Kefauver Act of 1950

Conglomerate mergers are combinations of

(Last Word) What problem is created for antitrust regulators by online pricing algorithms?

What is most likely to happen as the output of a natural monopoly increases over the range of market demand?

Which business practice is rarely challenged by the government under antitrust laws?

Conspiracies to fix prices are

"Behavioralists" in antitrust applications believe that a firm that dominates a market is not necessarily behaving unfairly.

One good example of a government agency involved mainly in social regulation is the Food and Drug Administration.

The Occupational Safety and Health Administration is mainly involved in

If the market is defined more narrowly to include only a more restricted range of products, then the Herfindahl index will

The largest efficiency gains from deregulation have occurred in the

Suppose that you own a toy store and want to buy 100 talking robots.Your supplier will sell you the robots only if you also agree to buy 200 dolls.This is an illegal practice called

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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