Question 1

In which of the following cases was the firm found not guilty of violating the Sherman Act?

Accepted Answer

A) Standard Oil case 
B) Microsoft case 
C) Alcoa case 
D) DuPont cellophane case 
A) Standard Oil case 
B) Microsoft case 
C) Alcoa case 
D) DuPont cellophane case

Question 2

If Tyson Corporation, a firm that raises and processes chickens, combined with Kentucky Fried Chicken, the resulting merger would be an example of a

Accepted Answer

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

Question 3

A firm charged with monopolizing a market is less likely to be convicted if

Accepted Answer

A) the court accepts a broad definition of the market. 
B) the court accepts a narrow definition of the market. 
C) it has gained its monopoly through abusive means. 
D) it sells its product to other firms, rather than directly to consumers. 
A) the court accepts a broad definition of the market. 
B) the court accepts a narrow definition of the market. 
C) it has gained its monopoly through abusive means. 
D) it sells its product to other firms, rather than directly to consumers.

Question 4

Which one of the following is not prohibited by the original Clayton Act?

Accepted Answer

A) the purchase of the stocks of rival firms that lessens competition 
B) the purchase of the assets of rival firms that lessens competition 
C) an exclusive dealer or tying agreements that lessen competition 
D) price discrimination that lessens competition 
A) the purchase of the stocks of rival firms that lessens competition 
B) the purchase of the assets of rival firms that lessens competition 
C) an exclusive dealer or tying agreements that lessen competition 
D) price discrimination that lessens competition

Question 5

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 6

Suppose the transportation industry has been regulated for many years. Government now proposes to deregulate the industry, only to find that firms in the industry oppose this action. This is consistent with the

Accepted Answer

A) public interest theory of regulation. 
B) theory of natural monopolies. 
C) legal cartel theory of regulation. 
D) Alcoa and U.S. Steel court decisions. 
A) public interest theory of regulation. 
B) theory of natural monopolies. 
C) legal cartel theory of regulation. 
D) Alcoa and U.S. Steel court decisions.

Question 7

The view that the antitrust laws need to be strongly enforced to prevent illegal business behaviors, monopolization of markets, and allocative inefficiency is known as the

Accepted Answer

A) structuralist view of antitrust. 
B) behavioralist view of antitrust. 
C) laissez-faire perspective on antitrust. 
D) active antitrust perspective. 
A) structuralist view of antitrust. 
B) behavioralist view of antitrust. 
C) laissez-faire perspective on antitrust. 
D) active antitrust perspective.

Question 8

Antitrust legislation in the United States in recent decades has

Accepted Answer

A) been vigorously and consistently enforced. 
B) been uniformly ignored with respect to enforcement. 
C) varied between the extremes of being enforced and being ignored. 
D) destroyed the American dream for the nation's entrepreneurs. 
A) been vigorously and consistently enforced. 
B) been uniformly ignored with respect to enforcement. 
C) varied between the extremes of being enforced and being ignored. 
D) destroyed the American dream for the nation's entrepreneurs.

Question 9

Which one of the following is not correct?

Accepted Answer

A) In antitrust cases defendants attempt to define the relevant market broadly. 
B) The courts have varied over time in their interpretations of the antitrust statutes. 
C) Antitrust suits can be originated only by the Federal Trade Commission. 
D) In antitrust cases the prosecution attempts to define the relevant market narrowly. 
A) In antitrust cases defendants attempt to define the relevant market broadly. 
B) The courts have varied over time in their interpretations of the antitrust statutes. 
C) Antitrust suits can be originated only by the Federal Trade Commission. 
D) In antitrust cases the prosecution attempts to define the relevant market narrowly.

Question 10

Which one of the following is concerned with industrial regulation, as distinct from social regulation?

Accepted Answer

A) Occupational Safety and Health Administration 
B) Consumer Products Safety Commission 
C) Federal Communications Commission 
D) Environmental Protection Agency 
A) Occupational Safety and Health Administration 
B) Consumer Products Safety Commission 
C) Federal Communications Commission 
D) Environmental Protection Agency

Question 11

Suppose that two firms in an industry with a Herfindahl index of 5,000 announce a merger. The U.S. Justice Department concludes the merger will boost the index to 5,500. The antitrust authorities will most likely

Accepted Answer

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

Question 12

If economies of scale in an industry are so extensive that a single firm could serve the entire market at a lower cost than if the market was split between two or more firms, this industry is called a(n)

Accepted Answer

A) conglomerate 
B) natural monopoly. 
C) oligopoly. 
D) restraint of trade. 
A) conglomerate 
B) natural monopoly. 
C) oligopoly. 
D) restraint of trade.

Question 13

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 14

The decision in the U.S. Steel case

Accepted Answer

A) reflected a monopoly behavior approach to antitrust. 
B) reflected a monopoly structure 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 monopoly behavior approach to antitrust. 
B) reflected a monopoly structure 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 15

How is price fixing among firms treated under antitrust policy?

Accepted Answer

Evidence of price-fixing, even by small

Question 16

Price-fixing

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 17

What do critics of social regulation need to remember about government?

Accepted Answer

Opponents of social regulation need to r

Question 18

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 19

The Clayton Act prohibits the acquisition of ____________ of competing corporations when the acquisition would lessen competition; the Celler-Kefauver Act prohibits the acquisition of ____________ of one firm by another firm when the acquisition would lessen competition.

Accepted Answer

A) stock; assets 
B) assets; stock 
C) stock; customers 
D) stock; bonds 
A) stock; assets 
B) assets; stock 
C) stock; customers 
D) stock; bonds

Question 20

The Celler-Kefauver Act of 1950

Accepted Answer

A) modified patent legislation by reducing the number of years over which a patent is applicable. 
B) prohibited any firm from acquiring the real assets of another firm where the effect was to lessen competition. 
C) declared all conglomerate mergers to be illegal. 
D) prohibited any firm from buying the stock of another firm where the effect was to lessen competition. 
A) modified patent legislation by reducing the number of years over which a patent is applicable. 
B) prohibited any firm from acquiring the real assets of another firm where the effect was to lessen competition. 
C) declared all conglomerate mergers to be illegal. 
D) prohibited any firm from buying the stock of another firm where the effect was to lessen competition.

Exam 21: Antitrust Policy and Regulation

In which of the following cases was the firm found not guilty of violating the Sherman Act?

If Tyson Corporation, a firm that raises and processes chickens, combined with Kentucky Fried Chicken, the resulting merger would be an example of a

A firm charged with monopolizing a market is less likely to be convicted if

Which one of the following is not prohibited by the original Clayton Act?

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

Suppose the transportation industry has been regulated for many years. Government now proposes to deregulate the industry, only to find that firms in the industry oppose this action. This is consistent with the

The view that the antitrust laws need to be strongly enforced to prevent illegal business behaviors, monopolization of markets, and allocative inefficiency is known as the

Antitrust legislation in the United States in recent decades has

Which one of the following is not correct?

Which one of the following is concerned with industrial regulation, as distinct from social regulation?

Suppose that two firms in an industry with a Herfindahl index of 5,000 announce a merger. The U.S. Justice Department concludes the merger will boost the index to 5,500. The antitrust authorities will most likely

If economies of scale in an industry are so extensive that a single firm could serve the entire market at a lower cost than if the market was split between two or more firms, this industry is called a(n)

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.

The decision in the U.S. Steel case

How is price fixing among firms treated under antitrust policy?

Price-fixing

What do critics of social regulation need to remember about government?

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

The Clayton Act prohibits the acquisition of ____________ of competing corporations when the acquisition would lessen competition; the Celler-Kefauver Act prohibits the acquisition of ____________ of one firm by another firm when the acquisition would lessen competition.

The Celler-Kefauver Act of 1950

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

Filters

The Clayton Act prohibits the acquisition of of competing corporations when the acquisition would lessen competition; the Celler-Kefauver Act prohibits the acquisition of of one firm by another firm when the acquisition would lessen competition.