Question 1

Why do the regulated companies oppose deregulation?

Accepted Answer

A) They are thrown out of the market. 
B) They are deprived of their rights to continue business. 
C) They are denied every kind of support from the government. 
D) They would incur losses on account of increased competition. 
E) They would become unpopular as no longer they would be controlled by the government. 
A) They are thrown out of the market. 
B) They are deprived of their rights to continue business. 
C) They are denied every kind of support from the government. 
D) They would incur losses on account of increased competition. 
E) They would become unpopular as no longer they would be controlled by the government. D

Question 2

Which of the following factors helps to determine how the costs of social regulation are split between consumers and producers.

Accepted Answer

A) The price elasticities of demand and supply 
B) The quantity produced by the firm 
C) The average total costs of the firm before regulation 
D) The number of consumers in the market 
E) The number of producers in the market 
A) The price elasticities of demand and supply 
B) The quantity produced by the firm 
C) The average total costs of the firm before regulation 
D) The number of consumers in the market 
E) The number of producers in the market A

Question 3

If social regulation causes the supply curve in a market to shift up because of higher marginal costs,then:

Accepted Answer

A) both consumer and producer surplus will decrease. 
B) both producer and consumer surplus will increase. 
C) consumers will gain at the expense of producers. 
D) producers will gain at the expense of consumers. 
E) there will be no change in the sum of producer and consumer surplus,although its division may change. 
A) both consumer and producer surplus will decrease. 
B) both producer and consumer surplus will increase. 
C) consumers will gain at the expense of producers. 
D) producers will gain at the expense of consumers. 
E) there will be no change in the sum of producer and consumer surplus,although its division may change. A

Question 4

The Justice Department of the U.S.classifies the industries on the basis of the Herfindahl index as:

Accepted Answer

A) below 500: highly competitive; 500-1000: moderately competitive; above 1000: highly concentrated. 
B) below 1000: highly competitive; 1000-1500: moderately competitive; above 1500: highly concentrated. 
C) below 500: highly competitive; 500-1500: moderately competitive; above 1500: highly concentrated. 
D) below 1000: highly competitive; 1000-1800: moderately competitive; above 1800: highly concentrated. 
E) below 1500: highly competitive; 1500-2000: moderately competitive; above 2000: highly concentrated. 
A) below 500: highly competitive; 500-1000: moderately competitive; above 1000: highly concentrated. 
B) below 1000: highly competitive; 1000-1500: moderately competitive; above 1500: highly concentrated. 
C) below 500: highly competitive; 500-1500: moderately competitive; above 1500: highly concentrated. 
D) below 1000: highly competitive; 1000-1800: moderately competitive; above 1800: highly concentrated. 
E) below 1500: highly competitive; 1500-2000: moderately competitive; above 2000: highly concentrated.

Question 5

Under the Clinton administration,attempts were made to relax the antitrust enforcement efforts of the Reagan administration.

Accepted Answer

A) True 
 B)False

Question 6

A market that is shared equally by 100 firms would have a Herfindahl index of :

Accepted Answer

A) 1. 
B) 1,000. 
C) 500. 
D) 100. 
E) 50. 
A) 1. 
B) 1,000. 
C) 500. 
D) 100. 
E) 50.

Question 7

The "buy American" restriction introduced in the U.S.in 2009 required:

Accepted Answer

A) entities receiving subsidies to invest in American stocks and bonds. 
B) entities receiving subsidies to sell their produce only to American consumers. 
C) entities receiving subsidies to produce only those goods specified by the U.S.government. 
D) entities receiving subsidies to maintain a price for their products as specified by the American government. 
E) entities receiving subsidies to purchase resources from American suppliers. 
A) entities receiving subsidies to invest in American stocks and bonds. 
B) entities receiving subsidies to sell their produce only to American consumers. 
C) entities receiving subsidies to produce only those goods specified by the U.S.government. 
D) entities receiving subsidies to maintain a price for their products as specified by the American government. 
E) entities receiving subsidies to purchase resources from American suppliers.

Question 8

Antitrust policies are a set of measures which are taken to liberate the economy from unnecessary governmental controls.

Accepted Answer

A) True 
 B)False

Question 9

Although the GATT was supported by most of the countries of the world,yet global trade shrank during the close of the last decade.This was due to:

Accepted Answer

A) growing suspicion among the nations of the world. 
B) hyperinflation in the major economies of the world. 
C) the recession which began in 2007. 
D) political turmoil in the Asian countries. 
E) the desire among the major players to dominate the international market. 
A) growing suspicion among the nations of the world. 
B) hyperinflation in the major economies of the world. 
C) the recession which began in 2007. 
D) political turmoil in the Asian countries. 
E) the desire among the major players to dominate the international market.

Question 10

Which of the following are the three laws that define the U.S government's approach to antitrust?

Accepted Answer

A) The Wilmington,Jackson,and International Trade Commission Acts 
B) The Springfield,Clayton,and Trade Commission Acts 
C) The Sherman,Clayton,and Federal Trade Commission Acts 
D) The Sherman,Jackson,and Regional Trade Commissions Acts 
E) The Jackson,Charleston and Sherman Monopoly Restrictive Trade Acts 
A) The Wilmington,Jackson,and International Trade Commission Acts 
B) The Springfield,Clayton,and Trade Commission Acts 
C) The Sherman,Clayton,and Federal Trade Commission Acts 
D) The Sherman,Jackson,and Regional Trade Commissions Acts 
E) The Jackson,Charleston and Sherman Monopoly Restrictive Trade Acts

Question 11

The judicial doctrine,being a monopoly or attempting to monopolize is not in itself illegal; to be illegal,an action had to be shown to have negative economic effects,is called:

Accepted Answer

A) the "big is bad" policy. 
B) the per se rule. 
C) predatory price-cutting policy. 
D) the rule of law. 
E) the rule of reason. 
A) the "big is bad" policy. 
B) the per se rule. 
C) predatory price-cutting policy. 
D) the rule of law. 
E) the rule of reason.

Question 12

If a market becomes deregulated and is forced to change from monopoly to competition,the monopolist may be stuck with costly assets for which no returns are possible.These assets are known as:

Accepted Answer

A) monopoly assets. 
B) market assets. 
C) non-returnable assets. 
D) stranded assets. 
E) sunk assets. 
A) monopoly assets. 
B) market assets. 
C) non-returnable assets. 
D) stranded assets. 
E) sunk assets.

Question 13

If social regulation increases a firm's fixed and variable costs:

Accepted Answer

A) then both marginal cost and average total cost will increase,and the firm will produce more. 
B) then both marginal cost and avetage total cost will increase,and the firm will produce less. 
C) then both marginal cost and average total cost will decrease,and profits will increase. 
D) Marginal cost will increase,average total cost will be constant,and price will decline. 
E) both price and quantity produced will fall. 
A) then both marginal cost and average total cost will increase,and the firm will produce more. 
B) then both marginal cost and avetage total cost will increase,and the firm will produce less. 
C) then both marginal cost and average total cost will decrease,and profits will increase. 
D) Marginal cost will increase,average total cost will be constant,and price will decline. 
E) both price and quantity produced will fall.

Question 14

In the following figure,the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation. Figure 12.2   In the figure,
D: Demand curve for automobiles
SS1U1B11S1U1B0: Supply curve of automobiles prior to regulation
SS1U1B12S1U1B0: Supply curve of automobiles after regulation
FG: Clean up cost per unit
-According to Figure 12.2,the total societal surplus after the regulation is:

Accepted Answer

A) area BEC. 
B) area AECJ. 
C) area IGQ1Q2. 
D) area 0FIQ2. 
E) area BAJ. 
A) area BEC. 
B) area AECJ. 
C) area IGQ1Q2. 
D) area 0FIQ2. 
E) area BAJ.

Question 15

Regulation of enterprises by the government has always been found to make the market more efficient.

Accepted Answer

A) True 
 B)False

Question 16

Antitrust policy is used to describe government policies and programs that are designed to:

Accepted Answer

A) promote the creation of trusts,or combinations of independent firms. 
B) control the growth of monopoly and enhance competition. 
C) deal with the threat of competitive practices to public interests. 
D) create an environment in which the government will distrust firms. 
E) create an environment in which firms will distrust the government. 
A) promote the creation of trusts,or combinations of independent firms. 
B) control the growth of monopoly and enhance competition. 
C) deal with the threat of competitive practices to public interests. 
D) create an environment in which the government will distrust firms. 
E) create an environment in which firms will distrust the government.

Question 17

When examining the costs of regulation to the U.S.economy,economists can safely ignore the opportunity costs of regulation because they are relatively insignificant compared with the direct costs of regulation.

Accepted Answer

A) True 
 B)False

Question 18

A Herfindahl index value of 20 for a particular industry indicates that the industry is most likely to be:

Accepted Answer

A) perfectly competitive. 
B) highly concentrated. 
C) oligopolistic. 
D) monopolistic. 
E) made up of illegal firms. 
A) perfectly competitive. 
B) highly concentrated. 
C) oligopolistic. 
D) monopolistic. 
E) made up of illegal firms.

Question 19

Monetary freedom refers to:

Accepted Answer

A) the ability to create and operate an enterprise easily. 
B) the absence of tariff and non-tariff barriers that affect imports of goods. 
C) the tax burden and overall tax revenue of the government. 
D) price stability with an assessment of price control. 
E) the free flow of foreign capital. 
A) the ability to create and operate an enterprise easily. 
B) the absence of tariff and non-tariff barriers that affect imports of goods. 
C) the tax burden and overall tax revenue of the government. 
D) price stability with an assessment of price control. 
E) the free flow of foreign capital.

Question 20

The Social Security tax structure in the United States is regressive in nature.

Accepted Answer

A) True 
 B)False

Exam 12: Antitrust and Regulation

Why do the regulated companies oppose deregulation?

Which of the following factors helps to determine how the costs of social regulation are split between consumers and producers.

If social regulation causes the supply curve in a market to shift up because of higher marginal costs,then:

The Justice Department of the U.S.classifies the industries on the basis of the Herfindahl index as:

Under the Clinton administration,attempts were made to relax the antitrust enforcement efforts of the Reagan administration.

A market that is shared equally by 100 firms would have a Herfindahl index of :

The "buy American" restriction introduced in the U.S.in 2009 required:

Antitrust policies are a set of measures which are taken to liberate the economy from unnecessary governmental controls.

Although the GATT was supported by most of the countries of the world,yet global trade shrank during the close of the last decade.This was due to:

Which of the following are the three laws that define the U.S government's approach to antitrust?

The judicial doctrine,being a monopoly or attempting to monopolize is not in itself illegal; to be illegal,an action had to be shown to have negative economic effects,is called:

If a market becomes deregulated and is forced to change from monopoly to competition,the monopolist may be stuck with costly assets for which no returns are possible.These assets are known as:

If social regulation increases a firm's fixed and variable costs:

Regulation of enterprises by the government has always been found to make the market more efficient.

Antitrust policy is used to describe government policies and programs that are designed to:

When examining the costs of regulation to the U.S.economy,economists can safely ignore the opportunity costs of regulation because they are relatively insignificant compared with the direct costs of regulation.

A Herfindahl index value of 20 for a particular industry indicates that the industry is most likely to be:

Monetary freedom refers to:

The Social Security tax structure in the United States is regressive in nature.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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