Question 1

Antitrust policy pertains to government regulation of firms' prices within selected industries, such as utilities.

Accepted Answer

A) True 
 B)False

Question 2

A firm is likely to be a natural monopoly

Accepted Answer

A) when the demand for its product or service is inelastic. 
B) if it is producing an inferior good. 
C) if economies of scale are experienced over the full range of output. 
D) because government grants it an exclusive franchise. 
A) when the demand for its product or service is inelastic. 
B) if it is producing an inferior good. 
C) if economies of scale are experienced over the full range of output. 
D) because government grants it an exclusive franchise.

Question 3

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 4

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

Question 5

Which of the following findings would be the most likely to lead the U.S. Justice Department to block a corporate merger under terms of the Clayton Act?

Accepted Answer

A) a buyer-seller relationship between the two firms 
B) a high pre-merger Herfindahl index in the industry and a large boost in the index because of the merger 
C) a low pre- and post-merger concentration ratio in the industry 
D) evidence that one of the firms is highly unprofitable 
A) a buyer-seller relationship between the two firms 
B) a high pre-merger Herfindahl index in the industry and a large boost in the index because of the merger 
C) a low pre- and post-merger concentration ratio in the industry 
D) evidence that one of the firms is highly unprofitable

Question 6

The sum of the squared values of market shares of firms in an industry is referred to as the

Accepted Answer

A) concentration ratio. 
B) Herfindahl index. 
C) variance value. 
D) antitrust index. 
A) concentration ratio. 
B) Herfindahl index. 
C) variance value. 
D) antitrust index.

Question 7

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 8

Which of the following has tended to reduce the importance of antitrust law, according to some economists?

Accepted Answer

A) industrial policy 
B) conglomerate mergers 
C) the rule of reason decision 
D) rapidly changing technology 
A) industrial policy 
B) conglomerate mergers 
C) the rule of reason decision 
D) rapidly changing technology

Question 9

The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. A merger between Firm 2 and Firm 3 in Alpha would be a

Accepted Answer

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

Question 10

Per se violations in antitrust law refer to

Accepted Answer

A) activities that are illegal in and of themselves. 
B) violations that are alleged but not yet proven. 
C) cases that are subject to the rule of reason. 
D) antitrust cases that are pending resolution. 
A) activities that are illegal in and of themselves. 
B) violations that are alleged but not yet proven. 
C) cases that are subject to the rule of reason. 
D) antitrust cases that are pending resolution.

Question 11

According to the Consider This box "Of Sea Fish and eBooks (and Other Things in Common)", which of the following firms were convicted for horizontal price-fixing?

Accepted Answer

A) Dell and Gateway (personal computer makers) 
B) Boeing and Airbus (aircraft manufacturers) 
C) Heinz and Del Monte (food product firms) 
D) Apple, Harper Collins, and Penguin (e-books) 
A) Dell and Gateway (personal computer makers) 
B) Boeing and Airbus (aircraft manufacturers) 
C) Heinz and Del Monte (food product firms) 
D) Apple, Harper Collins, and Penguin (e-books)

Question 12

Which antitrust act provided that injured parties could file suit and, if successful, collect triple damages from monopolistic violators?

Accepted Answer

A) Wheeler-Lea Act 
B) Clayton Act 
C) Sherman Act 
D) Celler-Kefauver Act 
A) Wheeler-Lea Act 
B) Clayton Act 
C) Sherman Act 
D) Celler-Kefauver Act

Question 13

The Consider This box "Of Sea Fish and eBooks (and Other Things in Common)" lists examples of recent antitrust cases involving

Accepted Answer

A) monopolization. 
B) tying contracts. 
C) price-fixing. 
D) horizontal mergers. 
A) monopolization. 
B) tying contracts. 
C) price-fixing. 
D) horizontal mergers.

Question 14

Laws and government actions designed to prevent monopoly and to promote competition are 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 15

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.

Question 16

Google was fined $5 billion by European Union antitrust officials for

Accepted Answer

A) conspiring with Microsoft to ensure that Google and Microsoft products were bundled. 
B) coercing smartphone manufacturers to install Google search bars over competing companies search bars. 
C) using pricing algorithms to price-fix with other Internet sellers. 
D) using its monopoly power to require all computers sold in Europe to support Google Chrome. 
A) conspiring with Microsoft to ensure that Google and Microsoft products were bundled. 
B) coercing smartphone manufacturers to install Google search bars over competing companies search bars. 
C) using pricing algorithms to price-fix with other Internet sellers. 
D) using its monopoly power to require all computers sold in Europe to support Google Chrome.

Question 17

The Celler-Kefauver Act made vertical mergers legal, provided each firm does not have more than 30 percent of its relevant market.

Accepted Answer

A) True 
 B)False

Question 18

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 19

The theory of regulation developed to deal with "natural monopolies" is called

Accepted Answer

A) legal cartel theory. 
B) public interest theory. 
C) potential competition theory. 
D) social regulation theory. 
A) legal cartel theory. 
B) public interest theory. 
C) potential competition theory. 
D) social regulation theory.

Question 20

The effectiveness of regulation is sometimes criticized because

Accepted Answer

A) regulators try to please everybody. 
B) of the high profits in regulated industries. 
C) regulators don't know how to regulate industries. 
D) regulators usually have been closely associated with the industries they regulate. 
A) regulators try to please everybody. 
B) of the high profits in regulated industries. 
C) regulators don't know how to regulate industries. 
D) regulators usually have been closely associated with the industries they regulate.

Exam 21: Antitrust Policy and Regulation

Antitrust policy pertains to government regulation of firms' prices within selected industries, such as utilities.

A firm is likely to be a natural monopoly

What problem is created for antitrust regulators by online pricing algorithms?

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

Which of the following findings would be the most likely to lead the U.S. Justice Department to block a corporate merger under terms of the Clayton Act?

The sum of the squared values of market shares of firms in an industry is referred to as the

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

Which of the following has tended to reduce the importance of antitrust law, according to some economists?

The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. A merger between Firm 2 and Firm 3 in Alpha would be a

Per se violations in antitrust law refer to

According to the Consider This box "Of Sea Fish and eBooks (and Other Things in Common)", which of the following firms were convicted for horizontal price-fixing?

Which antitrust act provided that injured parties could file suit and, if successful, collect triple damages from monopolistic violators?

The Consider This box "Of Sea Fish and eBooks (and Other Things in Common)" lists examples of recent antitrust cases involving

Laws and government actions designed to prevent monopoly and to promote competition are the focus of

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

Google was fined $5 billion by European Union antitrust officials for

The Celler-Kefauver Act made vertical mergers legal, provided each firm does not have more than 30 percent of its relevant market.

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

The theory of regulation developed to deal with "natural monopolies" is called

The effectiveness of regulation is sometimes criticized because

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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