Exam 13: Antitrust and Regulation

A contestable market will always end up as a monopoly in the absence of antitrust protection.

__________ are most likely to raise the eyebrows of antitrust officials while ______ are not.

Which of the following arguments are frequently used to justify laissez-faire policy?

For the courts, being too big a firm in an industry can be sufficient grounds, using the per se criterion, to charge the firm with violating antitrust laws.

The Interstate Commerce Commission was created to check the monopoly power of________ and ended up protecting them from the competitive forces of _________.

The optimal use of resources is achieved if

Laissez-faire advocates believe that the government should

If competition can be relied upon to serve as the regulator of a market, but if the game needs to be kept fair, the proper governmental policy should be

A cease-and-desist order issued by the FTC is

A fair price is set where P = ATC.

Monopoly profit cushions the losses that may arise from a failed technological change.

Some economists agree that monopolies are inevitable and bad, but they also believe that price regulation is the wrong way to combat the high prices of a monopolist. They prefer

The "per se" standard makes antitrust action less likely than would the "rule of reason".

Those who believe that monopolies are both inevitable and undesirable would probably support price regulation.

Some economists feel we should encourage market concentration because they believe monopolists and oligopolists can

Alan runs the only taxi service in town. Whenever he raises his fares above $.30 per mile, other taxi firms enter and compete with him to drive his fares back to $.30 per mile. Describe what kind of market Alan is operating in and if it is plausible that Alan might set his fare so as to achieve efficiency? Explain.

The deregulation of AT&T was possible primarily because

The argument that the government did not favor good trusts, but forbade all, is support for the __________ approach to antitrust.

Antitrust activity is not a good example of using the "power of the purse" to control administrative activities in support of political ideology.

Don's Taxicab Service is the only taxi company operating in a large city. In the beginning, Don took over the local taxi market by buying out his competition. Now he sets his own rates as a privately-owned monopoly, but residents and tourists are upset by the very high prices. If there are no economies of scale in taxicab service, then the bestsolution is most likely