Question 1

Under an average-cost pricing policy,a local water company will face which of the following?

Accepted Answer

A)  The local water company chooses the price at which short-run average cost curve intersects the average. 
B)  The local water company chooses the price at which long-run average cost curve intersects the average. 
C)  The government chooses the price at which the demand curve intersects the short-run marginal-cost curve 
D)  The government chooses the price at which the demand curve intersects the long-run average-cost curve. 
A)  The local water company chooses the price at which short-run average cost curve intersects the average. 
B)  The local water company chooses the price at which long-run average cost curve intersects the average. 
C)  The government chooses the price at which the demand curve intersects the short-run marginal-cost curve 
D)  The government chooses the price at which the demand curve intersects the long-run average-cost curve. D

Question 2

What are tie-in sales?

Accepted Answer

Tie-in sales are business practices under which a consumer of one product is required to purchase another product.

Question 3

Tie-in sales refers to the business practice of charging different prices to different groups of consumers based on their willingness-to-pay.

Accepted Answer

A) True 
 B)False  False

Question 4

The Federal Trade Commission may attempt to block a merger if they believe that the merger will lead to greater competition and lower prices in a market.

Accepted Answer

A) True 
 B)False

Question 5

A horizontal merger

Accepted Answer

A)  occurs when two firms that produce similar products combine their operations. 
B)  will never be opposed by the U.S. government but a vertical merger will. 
C)  always results in a loss of efficiency in a market. 
D)  involves two firms at different stages of the production process. 
A)  occurs when two firms that produce similar products combine their operations. 
B)  will never be opposed by the U.S. government but a vertical merger will. 
C)  always results in a loss of efficiency in a market. 
D)  involves two firms at different stages of the production process.

Question 6

From a business perspective,the main problem with predatory pricing is that it never ends and the firm must repeatedly lose money to drive out new competitors.

Accepted Answer

A) True 
 B)False

Question 7

A merger is a process in which two or more firms combine their operations.

Accepted Answer

A) True 
 B)False

Question 8

Most often,a natural monopoly will

Accepted Answer

A)  charge the profit-maximizing price. 
B)  charge a price equal to average variable cost. 
C)  be subject to a maximum price set by the government. 
D)  all of the above 
A)  charge the profit-maximizing price. 
B)  charge a price equal to average variable cost. 
C)  be subject to a maximum price set by the government. 
D)  all of the above

Question 9

The Clayton Act outlawed specific practices that discourage competition.

Accepted Answer

A) True 
 B)False

Question 10

What is predatory pricing?

Accepted Answer

Predatory pricing is the pract

Question 11

A second firm will not enter a natural monopolistic market due to the large economies of scale.

Accepted Answer

A) True 
 B)False

Question 12

If the government sets a maximum price for a natural monopolistic firm,a change in production cost will

Accepted Answer

A)  increase the firm's profits. 
B)  decrease the firm's profits. 
C)  have little effect on the firm's profit. 
D)  prevent the firm to earn economic profit in the short run. 
A)  increase the firm's profits. 
B)  decrease the firm's profits. 
C)  have little effect on the firm's profit. 
D)  prevent the firm to earn economic profit in the short run.

Question 13

-Refer to Figure 13.1.If the cable company depicted was free to sell to any number of subscribers it desires and set any price,it would sell to ________ subscribers at a price of ________.

Accepted Answer

A)  800; $15 
B)  1,000; $16 
C)  2,200; $13 
D)  2,500; $12 
A)  800; $15 
B)  1,000; $16 
C)  2,200; $13 
D)  2,500; $12

Question 14

The practice of requiring a consumer to purchase two or more products together,rather than separately,is called

Accepted Answer

A)  free-riding. 
B)  cartelling. 
C)  tie-in sales. 
D)  predatory pricing. 
A)  free-riding. 
B)  cartelling. 
C)  tie-in sales. 
D)  predatory pricing.

Question 15

A tie-in sale occurs when

Accepted Answer

A)  it encourages the enforcement of cooperative agreements. 
B)  a business sells a few products that work well when used together. 
C)  a business forces the buyer of one product to purchase another product. 
D)  a business sells a product at a price below its production cost. 
A)  it encourages the enforcement of cooperative agreements. 
B)  a business sells a few products that work well when used together. 
C)  a business forces the buyer of one product to purchase another product. 
D)  a business sells a product at a price below its production cost.

Question 16

-Refer to Figure 13.2.The profit-maximizing price for the unregulated firm would be

Accepted Answer

A)    
B)    
C)    
D)  cannot be determined from the information given 
A)    
B)    
C)    
D)  cannot be determined from the information given

Question 17

A company that sells a product and is looking to be involved in the integration of another of its products,thus requiring consumers to purchase both of them together rather than separately,is engaging in a concept known as

Accepted Answer

A)  predatory pricing. 
B)  price fixing. 
C)  collusion. 
D)  tie-in sales. 
A)  predatory pricing. 
B)  price fixing. 
C)  collusion. 
D)  tie-in sales.

Question 18

When Interstate Bakeries tried to buy the maker of Wonder Bread,

Accepted Answer

A)  the government concluded that the merger would not significantly affect the price of bread. 
B)  the two brands of bread were determined to be close substitutes. 
C)  the Federal Trade Commission believed that the merger was a good idea because the combined firm would face lower costs and the cost savings could be passed to consumers in the form of lower prices. 
D)  the government concluded that the merger would reduce tax receipts paid to state governments, and therefore blocked the merger attempt. 
A)  the government concluded that the merger would not significantly affect the price of bread. 
B)  the two brands of bread were determined to be close substitutes. 
C)  the Federal Trade Commission believed that the merger was a good idea because the combined firm would face lower costs and the cost savings could be passed to consumers in the form of lower prices. 
D)  the government concluded that the merger would reduce tax receipts paid to state governments, and therefore blocked the merger attempt.

Question 19

A natural monopoly is the result of barriers such as patents and government licenses.

Accepted Answer

A) True 
 B)False

Question 20

What is a natural monopoly? How is it different from other monopolies?

Accepted Answer

A natural monopoly occurs when the long-

Under an average-cost pricing policy,a local water company will face which of the following?

What are tie-in sales?

Tie-in sales refers to the business practice of charging different prices to different groups of consumers based on their willingness-to-pay.

The Federal Trade Commission may attempt to block a merger if they believe that the merger will lead to greater competition and lower prices in a market.

A horizontal merger

From a business perspective,the main problem with predatory pricing is that it never ends and the firm must repeatedly lose money to drive out new competitors.

A merger is a process in which two or more firms combine their operations.

Most often,a natural monopoly will

The Clayton Act outlawed specific practices that discourage competition.

What is predatory pricing?

A second firm will not enter a natural monopolistic market due to the large economies of scale.

If the government sets a maximum price for a natural monopolistic firm,a change in production cost will

-Refer to Figure 13.1.If the cable company depicted was free to sell to any number of subscribers it desires and set any price,it would sell to subscribers at a price of .

The practice of requiring a consumer to purchase two or more products together,rather than separately,is called

A tie-in sale occurs when

-Refer to Figure 13.2.The profit-maximizing price for the unregulated firm would be

A company that sells a product and is looking to be involved in the integration of another of its products,thus requiring consumers to purchase both of them together rather than separately,is engaging in a concept known as

When Interstate Bakeries tried to buy the maker of Wonder Bread,

A natural monopoly is the result of barriers such as patents and government licenses.

What is a natural monopoly? How is it different from other monopolies?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 13: Controlling Market Power: Antitrust and Regulation

Under an average-cost pricing policy,a local water company will face which of the following?

What are tie-in sales?

Tie-in sales refers to the business practice of charging different prices to different groups of consumers based on their willingness-to-pay.

The Federal Trade Commission may attempt to block a merger if they believe that the merger will lead to greater competition and lower prices in a market.

A horizontal merger

From a business perspective,the main problem with predatory pricing is that it never ends and the firm must repeatedly lose money to drive out new competitors.

A merger is a process in which two or more firms combine their operations.

Most often,a natural monopoly will

The Clayton Act outlawed specific practices that discourage competition.

What is predatory pricing?

A second firm will not enter a natural monopolistic market due to the large economies of scale.

If the government sets a maximum price for a natural monopolistic firm,a change in production cost will

-Refer to Figure 13.1.If the cable company depicted was free to sell to any number of subscribers it desires and set any price,it would sell to ________ subscribers at a price of ________.

The practice of requiring a consumer to purchase two or more products together,rather than separately,is called

A tie-in sale occurs when

-Refer to Figure 13.2.The profit-maximizing price for the unregulated firm would be

A company that sells a product and is looking to be involved in the integration of another of its products,thus requiring consumers to purchase both of them together rather than separately,is engaging in a concept known as

When Interstate Bakeries tried to buy the maker of Wonder Bread,

A natural monopoly is the result of barriers such as patents and government licenses.

What is a natural monopoly? How is it different from other monopolies?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

-Refer to Figure 13.1.If the cable company depicted was free to sell to any number of subscribers it desires and set any price,it would sell to subscribers at a price of .