Question 1

Interlocking directorates refers to a situation where

Accepted Answer

A) a director of one firm is also a board member of a competing firm. 
B) members of the board of directors of a firm could not agree on a clear strategy for the firm. 
C) competing firms have separate and different members in their boards. 
D) a company's board splits into two rival camps locked in constant struggle. 
A) a director of one firm is also a board member of a competing firm. 
B) members of the board of directors of a firm could not agree on a clear strategy for the firm. 
C) competing firms have separate and different members in their boards. 
D) a company's board splits into two rival camps locked in constant struggle.

Question 2

What are tying contracts? How are tying contracts treated by antitrust enforcers?

Accepted Answer

A tying contract is a requirement impose

Question 3

A caption that could serve as a warning to proponents of social regulation is

Accepted Answer

A) "There is no free lunch." 
B) "The rule of reason will prevail." 
C) "The public interest will prevail." 
D) "Protect the greatest number." 
A) "There is no free lunch." 
B) "The rule of reason will prevail." 
C) "The public interest will prevail." 
D) "Protect the greatest number."

Question 4

In 2018, tuna companies StarKist and Bumble Bee 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 5

A vertical merger involves a combining of one or more firms

Accepted Answer

A) as the result of one firm purchasing the assets of the other. 
B) that are operating in entirely different industries. 
C) operating at different stages of the production process in a particular industry. 
D) operating at the same stage of the production process. 
A) as the result of one firm purchasing the assets of the other. 
B) that are operating in entirely different industries. 
C) operating at different stages of the production process in a particular industry. 
D) operating at the same stage of the production process.

Question 6

Defenders of social regulation point out that

Accepted Answer

A) social regulation is a better alternative than unregulated natural monopoly. 
B) critics who stress the high administrative and compliance costs of social regulation underestimate the social benefits that the regulations produce. 
C) the number of regulatory agencies has declined over the past two decades. 
D) social regulations reduce product prices. 
A) social regulation is a better alternative than unregulated natural monopoly. 
B) critics who stress the high administrative and compliance costs of social regulation underestimate the social benefits that the regulations produce. 
C) the number of regulatory agencies has declined over the past two decades. 
D) social regulations reduce product prices.

Question 7

Legislation designed to regulate natural monopolies would be based on which theory of regulation?

Accepted Answer

A) social 
B) legal cartel 
C) public interest 
D) price-fixing 
A) social 
B) legal cartel 
C) public interest 
D) price-fixing

Question 8

Which act specifically outlawed price discrimination when such discrimination is not justified based on 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 9

The rule of reason in antitrust applications means that if a firm has a dominant share of the market, it stands to reason that it will exploit its monopoly power to gain an unfair advantage over its rivals.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is characteristic of a regulated natural monopoly?

Accepted Answer

A) extensive economies of scale 
B) the wasteful duplication of capital facilities in the event of competition 
C) the provision of an essential service 
D) all of these 
A) extensive economies of scale 
B) the wasteful duplication of capital facilities in the event of competition 
C) the provision of an essential service 
D) all of these

Question 11

Most economists conclude that deregulation has reduced prices and led to more competition in deregulated industries.

Accepted Answer

A) True 
 B)False

Question 12

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 13

According to the Consider This box "Of Sea Fish and eBooks (and Other Things in Common)", firms from which country, in 2018, were fined for colluding to fix the price of construction rebar in the United States?

Accepted Answer

A) Korea 
B) France 
C) Japan 
D) Germany 
A) Korea 
B) France 
C) Japan 
D) Germany

Question 14

Suppose the firms in a six-firm industry have market shares of 32, 20, 16, 16, 10, and 6 percent, respectively. The Herfindahl index for the industry is

Accepted Answer

A) 1,936. 
B) 2,072. 
C) 84. 
D) 2,020. 
A) 1,936. 
B) 2,072. 
C) 84. 
D) 2,020.

Question 15

If a buyer who wants product A is required by the seller to buy its products B and C as well, this is called

Accepted Answer

A) an exclusive contract. 
B) profit maximization. 
C) competitive pricing. 
D) a tying contract. 
A) an exclusive contract. 
B) profit maximization. 
C) competitive pricing. 
D) a tying contract.

Question 16

Critics of social regulation argue that it

Accepted Answer

A) causes deflation. 
B) violates the due process clause of the U.S. Constitution. 
C) is a relatively greater burden for small firms than for large firms. 
D) improves allocative efficiency. 
A) causes deflation. 
B) violates the due process clause of the U.S. Constitution. 
C) is a relatively greater burden for small firms than for large firms. 
D) improves allocative efficiency.

Question 17

Which type of merger is most likely to be the focus of antitrust scrutiny and enforcement?

Accepted Answer

A) conglomerate 
B) horizontal 
C) vertical 
D) natural 
A) conglomerate 
B) horizontal 
C) vertical 
D) natural

Question 18

Antitrust authorities are least likely to take action against

Accepted Answer

A) conglomerate mergers. 
B) horizontal mergers. 
C) interlocking directorates. 
D) price-fixing. 
A) conglomerate mergers. 
B) horizontal mergers. 
C) interlocking directorates. 
D) price-fixing.

Question 19

A major difference between industrial regulation and social regulation is that industrial regulation

Accepted Answer

A) covers many industries across the economy. 
B) has expanded rapidly since the 1970s. 
C) is targeted at the prices charged, the costs of production, and amount of profit. 
D) focuses on product design, employment conditions, and the production process. 
A) covers many industries across the economy. 
B) has expanded rapidly since the 1970s. 
C) is targeted at the prices charged, the costs of production, and amount of profit. 
D) focuses on product design, employment conditions, and the production process.

Question 20

What have been the major outcomes from deregulation of industry? Give three examples of changes in particular industries.

Accepted Answer

The overwhelming consensus among economi

Exam 21: Antitrust Policy and Regulation

Interlocking directorates refers to a situation where

What are tying contracts? How are tying contracts treated by antitrust enforcers?

A caption that could serve as a warning to proponents of social regulation is

In 2018, tuna companies StarKist and Bumble Bee were charged with which antitrust violation?

A vertical merger involves a combining of one or more firms

Defenders of social regulation point out that

Legislation designed to regulate natural monopolies would be based on which theory of regulation?

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

The rule of reason in antitrust applications means that if a firm has a dominant share of the market, it stands to reason that it will exploit its monopoly power to gain an unfair advantage over its rivals.

Which of the following is characteristic of a regulated natural monopoly?

Most economists conclude that deregulation has reduced prices and led to more competition in deregulated industries.

The Celler-Kefauver Act of 1950

According to the Consider This box "Of Sea Fish and eBooks (and Other Things in Common)", firms from which country, in 2018, were fined for colluding to fix the price of construction rebar in the United States?

Suppose the firms in a six-firm industry have market shares of 32, 20, 16, 16, 10, and 6 percent, respectively. The Herfindahl index for the industry is

If a buyer who wants product A is required by the seller to buy its products B and C as well, this is called

Critics of social regulation argue that it

Which type of merger is most likely to be the focus of antitrust scrutiny and enforcement?

Antitrust authorities are least likely to take action against

A major difference between industrial regulation and social regulation is that industrial regulation

What have been the major outcomes from deregulation of industry? Give three examples of changes in particular industries.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, 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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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