Question 1

The general conclusion of most economists about deregulation of previously regulated industries in the United States is that it resulted in

Accepted Answer

A) increased monopoly power. 
B) lower rates of innovation. 
C) increased bureaucratic control. 
D) decreased prices of goods and services. 
A) increased monopoly power. 
B) lower rates of innovation. 
C) increased bureaucratic control. 
D) decreased prices of goods and services.

Question 2

Monopolization is illegal under Section 1 of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 3

In the 2000 decision on the Microsoft antitrust case, the eventual remedy involved a

Accepted Answer

A) change in the business practices of Microsoft. 
B) merging of Microsoft with another company. 
C) breakup of Microsoft into smaller firms. 
D) takeover of Microsoft by the government. 
A) change in the business practices of Microsoft. 
B) merging of Microsoft with another company. 
C) breakup of Microsoft into smaller firms. 
D) takeover of Microsoft by the government.

Question 4

Which of the following is correct?

Accepted Answer

A) Vertical mergers are more likely to be acceptable under antitrust laws than are horizontal mergers. 
B) A vertical merger entails the merging of two or more competing firms. 
C) Horizontal mergers are more likely to be acceptable under antitrust laws than are vertical mergers. 
D) Conglomerate mergers occur when two or more firms at various stages in a good's production are combined. 
A) Vertical mergers are more likely to be acceptable under antitrust laws than are horizontal mergers. 
B) A vertical merger entails the merging of two or more competing firms. 
C) Horizontal mergers are more likely to be acceptable under antitrust laws than are vertical mergers. 
D) Conglomerate mergers occur when two or more firms at various stages in a good's production are combined.

Question 5

The Sherman Act of 1890 outlawed

Accepted Answer

A) monopoly pricing and foreign trade. 
B) price discrimination and monopoly profits. 
C) restraint of trade and monopolization. 
D) foreign trade and monopolization. 
A) monopoly pricing and foreign trade. 
B) price discrimination and monopoly profits. 
C) restraint of trade and monopolization. 
D) foreign trade and monopolization.

Question 6

Most economists agree that deregulation in the 1970s and 1980s greatly benefited consumers in all of the following industries except

Accepted Answer

A) automotive. 
B) railroads. 
C) airlines. 
D) trucking. 
A) automotive. 
B) railroads. 
C) airlines. 
D) trucking.

Question 7

The government and courts have not been consistent in interpreting and enforcing antitrust laws over the years.

Accepted Answer

A) True 
 B)False

Question 8

Dominant firms that formed in several industries in the U.S.in the 1870s and 1880s, which assigned control to a single decision group, were referred to as

Accepted Answer

A) trusts. 
B) mergers. 
C) tying contracts. 
D) single-seller monopoly. 
A) trusts. 
B) mergers. 
C) tying contracts. 
D) single-seller monopoly.

Question 9

The legal cartel theory of regulation argues that

Accepted Answer

A) regulation encourages firms to inflate their production costs. 
B) firms in certain industries want to be regulated rather than face the rigors of competition. 
C) social regulation has been carried beyond the point at which marginal benefits and marginal costs are equal. 
D) the government is the logical agency to protect consumers from natural monopolies. 
A) regulation encourages firms to inflate their production costs. 
B) firms in certain industries want to be regulated rather than face the rigors of competition. 
C) social regulation has been carried beyond the point at which marginal benefits and marginal costs are equal. 
D) the government is the logical agency to protect consumers from natural monopolies.

Question 10

Proposed ergonomics regulations are an example of industrial regulation (rather than social regulation).

Accepted Answer

A) True 
 B)False

Question 11

Which of the following beliefs is not strongly espoused by the "laissez-faire perspective" in antitrust policy?

Accepted Answer

A) Competition among firms is a battle for dominance. 
B) The focus of antitrust policy should be on market structure rather than behavior. 
C) Competition and creative destruction could lead to monopolies. 
D) Monopoly pricing and profits create incentives for firms that are economically beneficial. 
A) Competition among firms is a battle for dominance. 
B) The focus of antitrust policy should be on market structure rather than behavior. 
C) Competition and creative destruction could lead to monopolies. 
D) Monopoly pricing and profits create incentives for firms that are economically beneficial.

Question 12

In 2007 British Airlines and Korean Air were charged with which antitrust violation?

Accepted Answer

A) monopoly structure 
B) price-fixing 
C) tying contracts 
D) dividing up the market 
A) monopoly structure 
B) price-fixing 
C) tying contracts 
D) dividing up the market

Question 13

Using antitrust law to split up an unregulated natural monopoly into several competing firms

Accepted Answer

A) would reduce product price. 
B) would increase product price. 
C) might either increase product price or reduce product price. 
D) would reduce average total cost. 
A) would reduce product price. 
B) would increase product price. 
C) might either increase product price or reduce product price. 
D) would reduce average total cost.

Question 14

Structuralists take the position that

Accepted Answer

A) the rule of reason is appropriate and desirable in interpreting the Sherman Act. 
B) only unreasonable anticompetitive acts should be regarded as violations of the antitrust laws. 
C) industries should be judged on the basis of their technological progress and their price-output behavior. 
D) an industry that is highly concentrated will behave monopolistically. 
A) the rule of reason is appropriate and desirable in interpreting the Sherman Act. 
B) only unreasonable anticompetitive acts should be regarded as violations of the antitrust laws. 
C) industries should be judged on the basis of their technological progress and their price-output behavior. 
D) an industry that is highly concentrated will behave monopolistically.

Question 15

Which of the following indexes is used in Federal merger guidelines?

Accepted Answer

A) consumer price index 
B) unemployment benefits index 
C) employment cost index 
D) Herfindahl index 
A) consumer price index 
B) unemployment benefits index 
C) employment cost index 
D) Herfindahl index

Question 16

Which act specifically outlawed price discrimination when such discrimination is not justified on the basis of cost differences and when it reduces competition?

Accepted Answer

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

Question 17

Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger.The U.S.Justice Department concludes the merger will boost the index to 1,050.The antitrust authorities will most likely

Accepted Answer

A) ignore this merger because of the relatively small size of, and increase in, the Herfindahl index. 
B) prevent the merger, contending that it violates the Clayton Act. 
C) allow the merger if foreign entry to the industry is possible. 
D) allow the merger but watch the new firm carefully for future violations of the antitrust laws. 
A) ignore this merger because of the relatively small size of, and increase in, the Herfindahl index. 
B) prevent the merger, contending that it violates the Clayton Act. 
C) allow the merger if foreign entry to the industry is possible. 
D) allow the merger but watch the new firm carefully for future violations of the antitrust laws.

Question 18

Differences in the application of antitrust laws are in part rooted on the issue of how broadly antitrust authorities should define the relevant

Accepted Answer

A) market. 
B) product. 
C) price. 
D) firm. 
A) market. 
B) product. 
C) price. 
D) firm.

Question 19

Which of the following gave the Federal Trade Commission responsibility to protect the public against false and misleading advertising?

Accepted Answer

A) Celler-Kefauver Act of 1950 
B) Wheeler-Lea Act of 1938 
C) Clayton Act of 1914 
D) Sherman Act of 1890 
A) Celler-Kefauver Act of 1950 
B) Wheeler-Lea Act of 1938 
C) Clayton Act of 1914 
D) Sherman Act of 1890

Question 20

Which of the following is a primary concern of social regulation?

Accepted Answer

A) price-fixing 
B) per se violation 
C) product design 
D) industry concentration 
A) price-fixing 
B) per se violation 
C) product design 
D) industry concentration

Exam 21: Antitrust Policy and Regulation

The general conclusion of most economists about deregulation of previously regulated industries in the United States is that it resulted in

Monopolization is illegal under Section 1 of the Sherman Act.

In the 2000 decision on the Microsoft antitrust case, the eventual remedy involved a

Which of the following is correct?

The Sherman Act of 1890 outlawed

Most economists agree that deregulation in the 1970s and 1980s greatly benefited consumers in all of the following industries except

The government and courts have not been consistent in interpreting and enforcing antitrust laws over the years.

Dominant firms that formed in several industries in the U.S.in the 1870s and 1880s, which assigned control to a single decision group, were referred to as

The legal cartel theory of regulation argues that

Proposed ergonomics regulations are an example of industrial regulation (rather than social regulation).

Which of the following beliefs is not strongly espoused by the "laissez-faire perspective" in antitrust policy?

In 2007 British Airlines and Korean Air were charged with which antitrust violation?

Using antitrust law to split up an unregulated natural monopoly into several competing firms

Structuralists take the position that

Which of the following indexes is used in Federal merger guidelines?

Which act specifically outlawed price discrimination when such discrimination is not justified on the basis of cost differences and when it reduces competition?

Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger.The U.S.Justice Department concludes the merger will boost the index to 1,050.The antitrust authorities will most likely

Differences in the application of antitrust laws are in part rooted on the issue of how broadly antitrust authorities should define the relevant

Which of the following gave the Federal Trade Commission responsibility to protect the public against false and misleading advertising?

Which of the following is a primary concern of social regulation?

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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