Question 1

A fair price gets its name because it is the price at which

Accepted Answer

A)  society values the marginal product in proportion to the cost of the resources used in production 
B)  the marginal benefit of the last unit consumed is equal to the marginal value of the resources used to produce it 
C)  the monopolist would make normal profit in a competitive market 
D)  resources are distributed equitably 
E)  normal profit would be made in any other market 
A)  society values the marginal product in proportion to the cost of the resources used in production 
B)  the marginal benefit of the last unit consumed is equal to the marginal value of the resources used to produce it 
C)  the monopolist would make normal profit in a competitive market 
D)  resources are distributed equitably 
E)  normal profit would be made in any other market

Question 2

Laissez-faire implies a hands-off approach to the market by the government.

Accepted Answer

A) True 
 B)False

Question 3

A contestable market is one in which prices are moderated by the

Accepted Answer

A)  need to build an empire 
B)  desire to maximize output 
C)  noncompetitive nature of the market 
D)  threat of potential entry 
E)  regulations imposed by government 
A)  need to build an empire 
B)  desire to maximize output 
C)  noncompetitive nature of the market 
D)  threat of potential entry 
E)  regulations imposed by government

Question 4

Since the 1980s, the Congressional budget has allocated substantial funds to antitrust investigation and enforcement, which is why the Antitrust Division of the Department ofJustice is one of the most vigorous agencies of government today.

Accepted Answer

A) True 
 B)False

Question 5

If substantial economies of scale exist, setting price = MC will

Accepted Answer

A)  result in a loss for the firm 
B)  result in an excess profit earned 
C)  yield a normal profit 
D)  cause the firm to produce more than the optimal number of goods 
E)  cause the firm to charge lower than the optimal price 
A)  result in a loss for the firm 
B)  result in an excess profit earned 
C)  yield a normal profit 
D)  cause the firm to produce more than the optimal number of goods 
E)  cause the firm to charge lower than the optimal price

Question 6

Micromania's City Council has been discussing policy options regarding the local taxi company. Citizens have complained that it is a natural monopoly and that its fees are inappropriate. Which of the following would allow the company to stay in business while guaranteeing a "reasonable" taxi price for citizens?

Accepted Answer

A)  average cost pricing 
B)  marginal cost pricing 
C)  laissez-faire pricing 
D)  countervailing pricing 
E)  contestable pricing 
A)  average cost pricing 
B)  marginal cost pricing 
C)  laissez-faire pricing 
D)  countervailing pricing 
E)  contestable pricing

Question 7

The Sherman Antitrust Act of 1890 proved to be not sufficiently specific to curb monopoly power in the United States.

Accepted Answer

A) True 
 B)False

Question 8

The United States has numerous antitrust laws on the books and numerous legal precedents on acceptable corporate behavior. Still, the true commitment to enforcement ismeasured by the

Accepted Answer

A)  number of monopolies we sue 
B)  number of monopolies we break up 
C)  partiality of the federal judges 
D)  willingness of industry to behave 
E)  budget of the enforcement agencies 
A)  number of monopolies we sue 
B)  number of monopolies we break up 
C)  partiality of the federal judges 
D)  willingness of industry to behave 
E)  budget of the enforcement agencies

Question 9

Monopoly market structures may lead to lower prices than competitive markets in the presence of

Accepted Answer

A)  price discrimination 
B)  laissez-faire 
C)  contestable markets 
D)  substantial economies of scale 
E)  countervailing power 
A)  price discrimination 
B)  laissez-faire 
C)  contestable markets 
D)  substantial economies of scale 
E)  countervailing power

Question 10

When contestable markets exist,

Accepted Answer

A)  it must be an oligopoly 
B)  the firms set high prices and earn economic profits 
C)  the threat of new firms entering keeps prices low 
D)  the government must take steps to regulate the firms 
E)  laissez-faire can lead to greater market concentration 
A)  it must be an oligopoly 
B)  the firms set high prices and earn economic profits 
C)  the threat of new firms entering keeps prices low 
D)  the government must take steps to regulate the firms 
E)  laissez-faire can lead to greater market concentration

Question 11

If price is set equal to marginal cost when marginal cost is below ATC, the firm will receive a profit greater than profit earned when marginal cost is above ATC.

Accepted Answer

A) True 
 B)False

Question 12

The primary reason conglomerate mergers are the most difficult to attack under the antitrust laws is that

Accepted Answer

A)  these mergers always involve a domestic firm and a foreign firm 
B)  these mergers always involve the largest corporations in the United States 
C)  there is no statute the government can use to attack them in court 
D)  these mergers do not increase concentration in any market 
E)  these mergers are always beneficial 
A)  these mergers always involve a domestic firm and a foreign firm 
B)  these mergers always involve the largest corporations in the United States 
C)  there is no statute the government can use to attack them in court 
D)  these mergers do not increase concentration in any market 
E)  these mergers are always beneficial

Question 13

If the market power of a labor union enables it to offset the market power of an oligopolistic firm, this is called

Accepted Answer

A)  monopolistic competition 
B)  cartel pricing 
C)  price discrimination 
D)  contestable markets 
E)  countervailing power 
A)  monopolistic competition 
B)  cartel pricing 
C)  price discrimination 
D)  contestable markets 
E)  countervailing power

Question 14

Explain why producers rather than consumers may be the beneficiaries of regulation. Does the evidencesupport this view?

Accepted Answer

The benefits of much economic regulation

Question 15

A patent gives an innovating firm how many years of legal protection from competition?

Accepted Answer

A)  1 year 
B)  5 years 
C)  10 years 
D)  20 years 
E)  23 years 
A)  1 year 
B)  5 years 
C)  10 years 
D)  20 years 
E)  23 years

Question 16

Which of the following are options available to government when dealing with monopolies?

Accepted Answer

A)  b, c, and e 
B)  nationalization 
C)  marginal cost pricing regulation 
D)  marginal revenue pricing regulation 
E)  breaking up the firm 
A)  b, c, and e 
B)  nationalization 
C)  marginal cost pricing regulation 
D)  marginal revenue pricing regulation 
E)  breaking up the firm

Question 17

Setting a fair price means

Accepted Answer

A)  c and e 
B)  lowering the price until the monopolist says "unfair" 
C)  pricing at the point where average fixed and average variable costs sum to the price 
D)  imposing unreasonable restrictions on the price making capability of competitive firms 
E)  pricing as if the market were actually competitive 
A)  c and e 
B)  lowering the price until the monopolist says "unfair" 
C)  pricing at the point where average fixed and average variable costs sum to the price 
D)  imposing unreasonable restrictions on the price making capability of competitive firms 
E)  pricing as if the market were actually competitive

Question 18

The biggest weapon of the Federal Trade Commission (FTC) is the "threat" of antitrust action, not action itself.

Accepted Answer

A) True 
 B)False

Question 19

Marginal cost pricing regulations for a natural monopolist ensure that

Accepted Answer

A)  b and e 
B)  price reflects the value society places on the last unit produced 
C)  output will continue to grow until the required subsidy is zero 
D)  fair pricing schemes are more profitable 
E)  subsidization will be necessary 
A)  b and e 
B)  price reflects the value society places on the last unit produced 
C)  output will continue to grow until the required subsidy is zero 
D)  fair pricing schemes are more profitable 
E)  subsidization will be necessary

Question 20

A section of Chapter 13 is called "Who Regulates the Regulators?" This section describes how some

Accepted Answer

A)  pricing rules are chosen 
B)  industries are protected by their regulators 
C)  people are regulators and board members simultaneously 
D)  ICC employees work for the FCC 
E)  railroads captured the CAB 
A)  pricing rules are chosen 
B)  industries are protected by their regulators 
C)  people are regulators and board members simultaneously 
D)  ICC employees work for the FCC 
E)  railroads captured the CAB

A fair price gets its name because it is the price at which

Laissez-faire implies a hands-off approach to the market by the government.

A contestable market is one in which prices are moderated by the

Since the 1980s, the Congressional budget has allocated substantial funds to antitrust investigation and enforcement, which is why the Antitrust Division of the Department ofJustice is one of the most vigorous agencies of government today.

If substantial economies of scale exist, setting price = MC will

The Sherman Antitrust Act of 1890 proved to be not sufficiently specific to curb monopoly power in the United States.

The United States has numerous antitrust laws on the books and numerous legal precedents on acceptable corporate behavior. Still, the true commitment to enforcement ismeasured by the

Monopoly market structures may lead to lower prices than competitive markets in the presence of

When contestable markets exist,

If price is set equal to marginal cost when marginal cost is below ATC, the firm will receive a profit greater than profit earned when marginal cost is above ATC.

The primary reason conglomerate mergers are the most difficult to attack under the antitrust laws is that

If the market power of a labor union enables it to offset the market power of an oligopolistic firm, this is called

Explain why producers rather than consumers may be the beneficiaries of regulation. Does the evidencesupport this view?

A patent gives an innovating firm how many years of legal protection from competition?

Which of the following are options available to government when dealing with monopolies?

Setting a fair price means

The biggest weapon of the Federal Trade Commission (FTC) is the "threat" of antitrust action, not action itself.

Marginal cost pricing regulations for a natural monopolist ensure that

A section of Chapter 13 is called "Who Regulates the Regulators?" This section describes how some

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters

Exam 13: Antitrust and Regulation

A fair price gets its name because it is the price at which

Laissez-faire implies a hands-off approach to the market by the government.

A contestable market is one in which prices are moderated by the

Since the 1980s, the Congressional budget has allocated substantial funds to antitrust investigation and enforcement, which is why the Antitrust Division of the Department ofJustice is one of the most vigorous agencies of government today.

If substantial economies of scale exist, setting price = MC will

The Sherman Antitrust Act of 1890 proved to be not sufficiently specific to curb monopoly power in the United States.

The United States has numerous antitrust laws on the books and numerous legal precedents on acceptable corporate behavior. Still, the true commitment to enforcement ismeasured by the

Monopoly market structures may lead to lower prices than competitive markets in the presence of

When contestable markets exist,

If price is set equal to marginal cost when marginal cost is below ATC, the firm will receive a profit greater than profit earned when marginal cost is above ATC.

The primary reason conglomerate mergers are the most difficult to attack under the antitrust laws is that

If the market power of a labor union enables it to offset the market power of an oligopolistic firm, this is called

Explain why producers rather than consumers may be the beneficiaries of regulation. Does the evidencesupport this view?

A patent gives an innovating firm how many years of legal protection from competition?

Which of the following are options available to government when dealing with monopolies?

Setting a fair price means

The biggest weapon of the Federal Trade Commission (FTC) is the "threat" of antitrust action, not action itself.

Marginal cost pricing regulations for a natural monopolist ensure that

A section of Chapter 13 is called "Who Regulates the Regulators?" This section describes how some

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters