Question 1

The antitrust laws are based on the

Accepted Answer

A) creative destruction view of competition. 
B) idea that competition leads to greater economic efficiency than does a monopoly. 
C) view that nonprice competition should be strictly regulated by government. 
D) view that all negative externalities should be eliminated by government action. 
A) creative destruction view of competition. 
B) idea that competition leads to greater economic efficiency than does a monopoly. 
C) view that nonprice competition should be strictly regulated by government. 
D) view that all negative externalities should be eliminated by government action.

Question 2

The idea that competition is in some circumstances insufficient to achieve allocative efficiency and ensure fairness to consumers and competing firms is most closely associated with which antitrust perspective?

Accepted Answer

A) laissez-faire 
B) Herfindahl 
C) passive 
D) active 
A) laissez-faire 
B) Herfindahl 
C) passive 
D) active

Question 3

An industry has five firms, each with a market share of 20 percent.There is no foreign competition, entry into the industry is difficult, and no firm is on the verge of bankruptcy.If two of the firms in the industry seek to merge, this action would most likely be opposed by the government because the Herfindahl index for the industry is

Accepted Answer

A) 2,000 and the merger would increase the index by 500. 
B) 2,000 and the merger would increase the index by 800. 
C) 2,500 and the merger would increase the index by 500. 
D) 2,500 and the merger would increase the index by 1,200. 
A) 2,000 and the merger would increase the index by 500. 
B) 2,000 and the merger would increase the index by 800. 
C) 2,500 and the merger would increase the index by 500. 
D) 2,500 and the merger would increase the index by 1,200.

Question 4

The decision in the U.S.Steel case

Accepted Answer

A) reflected a behavioralist approach to antitrust. 
B) reflected a structuralist approach to antitrust. 
C) divided U.S.Steel into a number of smaller companies. 
D) ruled that U.S.Steel had engaged in illegal price-fixing. 
A) reflected a behavioralist approach to antitrust. 
B) reflected a structuralist approach to antitrust. 
C) divided U.S.Steel into a number of smaller companies. 
D) ruled that U.S.Steel had engaged in illegal price-fixing.

Question 5

If there was a conspiracy to fix prices, but the conspiracy did not succeed, the government can still take the conspiring firm to court for improper conduct.This situation would be an example of

Accepted Answer

A) the rule of reason. 
B) a cease-and-desist order. 
C) a per se violation. 
D) tying contracts. 
A) the rule of reason. 
B) a cease-and-desist order. 
C) a per se violation. 
D) tying contracts.

Question 6

The so-called rule of reason in interpreting antitrust legislation suggests that the application of antitrust laws should be based on industry

Accepted Answer

A) efficiency. 
B) concentration ratios. 
C) behavior. 
D) structure. 
A) efficiency. 
B) concentration ratios. 
C) behavior. 
D) structure.

Question 7

One main difference in the rulings on the 1945 Alcoa case and the 1956 DuPont cellophane case is that the Alcoa case

Accepted Answer

A) focused on structure, whereas the DuPont case focused on behavior. 
B) focused on behavior, whereas the DuPont case focused on structure. 
C) defined the market broadly, whereas the DuPont case defined the market narrowly. 
D) defined the market narrowly, whereas the DuPont case defined the market broadly. 
A) focused on structure, whereas the DuPont case focused on behavior. 
B) focused on behavior, whereas the DuPont case focused on structure. 
C) defined the market broadly, whereas the DuPont case defined the market narrowly. 
D) defined the market narrowly, whereas the DuPont case defined the market broadly.

Question 8

The merger of a firm in one industry with another firm in the same industry that sells similar products is called a

Accepted Answer

A) vertical merger. 
B) secondary merger. 
C) horizontal merger. 
D) conglomerate merger. 
A) vertical merger. 
B) secondary merger. 
C) horizontal merger. 
D) conglomerate merger.

Question 9

Anticompetitive mergers are illegal under provisions of the Clayton Act (as amended).Topic: Antitrust Policy: Issues and Impacts
Topic: The Antitrust Laws

Accepted Answer

A) True 
 B)False

Question 10

A merger between a maker of household detergents and a fast-food chain would be an example of

Accepted Answer

A) a horizontal merger. 
B) an interlocking directorate. 
C) a conglomerate merger. 
D) a tying contract. 
A) a horizontal merger. 
B) an interlocking directorate. 
C) a conglomerate merger. 
D) a tying contract.

Question 11

The degree of strictness in the enforcement of antitrust laws often depends on

Accepted Answer

A) political appointments. 
B) the rule of reason. 
C) use of the Herfindahl index. 
D) per se violations. 
A) political appointments. 
B) the rule of reason. 
C) use of the Herfindahl index. 
D) per se violations.

Question 12

A caption that could serve as a retort to opponents of social regulation would be

Accepted Answer

A) "There is no free lunch." 
B) "You can't push on a string." 
C) "Less government is not always better." 
D) "Restraints of trade must be outlawed." 
A) "There is no free lunch." 
B) "You can't push on a string." 
C) "Less government is not always better." 
D) "Restraints of trade must be outlawed."

Question 13

Which of the following amended the Clayton Act's prohibition against mergers that substantially lessen competition?

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 14

Public regulation rather than public ownership has been the primary means used in the United States to ensure that the behavior of natural monopolists is socially acceptable.

Accepted Answer

A) True 
 B)False

Question 15

In which of the following pairs of antitrust cases did the firms prevail against the antitrust charges leveled against them?

Accepted Answer

A) the Alcoa case and the Microsoft case 
B) the U.S.Steel case and the Alcoa case 
C) the DuPont cellophane case and the U.S.Steel case 
D) the U.S.Steel case and the Microsoft case 
A) the Alcoa case and the Microsoft case 
B) the U.S.Steel case and the Alcoa case 
C) the DuPont cellophane case and the U.S.Steel case 
D) the U.S.Steel case and the Microsoft case

Question 16

A market in which the entire demand for a good or service can be satisfied at the least cost by a single firm is a

Accepted Answer

A) horizontal market. 
B) natural monopoly. 
C) contestable market. 
D) perfect market. 
A) horizontal market. 
B) natural monopoly. 
C) contestable market. 
D) perfect market.

Question 17

The situation where a single firm can supply the product to an entire market at a lower unit cost than if the market were split among a number of competing firms, is called a

Accepted Answer

A) dominant firm oligopoly. 
B) structured market. 
C) natural monopoly. 
D) trust. 
A) dominant firm oligopoly. 
B) structured market. 
C) natural monopoly. 
D) trust.

Question 18

What development in the 1970s and 1980s is considered one of the most extensive experiments in industrial policy in the last half-century?

Accepted Answer

A) extensive antitrust enforcement 
B) increased breakups of monopolies 
C) deregulation of industries 
D) fostering natural monopolies 
A) extensive antitrust enforcement 
B) increased breakups of monopolies 
C) deregulation of industries 
D) fostering natural monopolies

Question 19

A conglomerate merger

Accepted Answer

A) can extend the line of products sold, extend the territories in which products are sold, or combine totally unrelated products. 
B) is defined as a merger involving two firms that previously had a buyer-seller relationship. 
C) is defined as a merger involving two firms producing the same or similar products and selling them in the same geographical market. 
D) is illegal, per se. 
A) can extend the line of products sold, extend the territories in which products are sold, or combine totally unrelated products. 
B) is defined as a merger involving two firms that previously had a buyer-seller relationship. 
C) is defined as a merger involving two firms producing the same or similar products and selling them in the same geographical market. 
D) is illegal, per se.

Question 20

The main purpose of industrial regulation is to

Accepted Answer

A) lower price to marginal cost. 
B) lower price to average total cost such that the firm earns a fair return. 
C) break monopolies into competing firms. 
D) reduce X-inefficiency. 
A) lower price to marginal cost. 
B) lower price to average total cost such that the firm earns a fair return. 
C) break monopolies into competing firms. 
D) reduce X-inefficiency.

Exam 21: Antitrust Policy and Regulation

The antitrust laws are based on the

The idea that competition is in some circumstances insufficient to achieve allocative efficiency and ensure fairness to consumers and competing firms is most closely associated with which antitrust perspective?

The decision in the U.S.Steel case

If there was a conspiracy to fix prices, but the conspiracy did not succeed, the government can still take the conspiring firm to court for improper conduct.This situation would be an example of

The so-called rule of reason in interpreting antitrust legislation suggests that the application of antitrust laws should be based on industry

One main difference in the rulings on the 1945 Alcoa case and the 1956 DuPont cellophane case is that the Alcoa case

The merger of a firm in one industry with another firm in the same industry that sells similar products is called a

Anticompetitive mergers are illegal under provisions of the Clayton Act (as amended).Topic: Antitrust Policy: Issues and Impacts Topic: The Antitrust Laws

A merger between a maker of household detergents and a fast-food chain would be an example of

The degree of strictness in the enforcement of antitrust laws often depends on

A caption that could serve as a retort to opponents of social regulation would be

Which of the following amended the Clayton Act's prohibition against mergers that substantially lessen competition?

Public regulation rather than public ownership has been the primary means used in the United States to ensure that the behavior of natural monopolists is socially acceptable.

In which of the following pairs of antitrust cases did the firms prevail against the antitrust charges leveled against them?

A market in which the entire demand for a good or service can be satisfied at the least cost by a single firm is a

The situation where a single firm can supply the product to an entire market at a lower unit cost than if the market were split among a number of competing firms, is called a

What development in the 1970s and 1980s is considered one of the most extensive experiments in industrial policy in the last half-century?

A conglomerate merger

The main purpose of industrial regulation is to

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