Question 1

Which of the following is true ofthe General Agreement on Tariffs and Trade (GATT)?

Accepted Answer

A) It is now called the World Agreement on Trade and Tariffs. 
B) It was the global trade agreement that did away with the gold standard. 
C) It was a United States' policy to raise tariffs on imported sugar. 
D) It was the first global trade agreement that followed World War II. 
E) It was a global trade agreement to raise tariffs. 
A) It is now called the World Agreement on Trade and Tariffs. 
B) It was the global trade agreement that did away with the gold standard. 
C) It was a United States' policy to raise tariffs on imported sugar. 
D) It was the first global trade agreement that followed World War II. 
E) It was a global trade agreement to raise tariffs.

Question 2

Regulation of monopolies is justified on the ground that a monopolist sells too less at a too high price.

Accepted Answer

A) True 
 B)False

Question 3

Suppose that the demand for apples in Washington is elastic and the supply is inelastic.If the government of Washington passes a law prohibiting the use of synthetic pesticides that increases the marginal and average costs of producing apples,then:

Accepted Answer

A) the price of Washington State apples will decline. 
B) Washington will stop producing apples,and New York apple growers will benefit. 
C) apple growers will pass most of the increased costs on to consumers in the form of higher apple prices. 
D) apple growers will keep prices constant but reduce costs by advertising less. 
E) apple growers will bear most of the increased costs of regulation,and prices will increase only slightly. 
A) the price of Washington State apples will decline. 
B) Washington will stop producing apples,and New York apple growers will benefit. 
C) apple growers will pass most of the increased costs on to consumers in the form of higher apple prices. 
D) apple growers will keep prices constant but reduce costs by advertising less. 
E) apple growers will bear most of the increased costs of regulation,and prices will increase only slightly.

Question 4

Restrictions on the types of food additives that breakfast cereal manufacturers can use is an example of a social regulation.

Accepted Answer

A) True 
 B)False

Question 5

According to the Index of Economic Freedom,which of the following is the freest economy in the world?

Accepted Answer

A) Cuba 
B) Zimbabwe 
C) Hong Kong 
D) North Korea 
E) Libya 
A) Cuba 
B) Zimbabwe 
C) Hong Kong 
D) North Korea 
E) Libya

Question 6

The argument made in favor of privatization is:

Accepted Answer

A) that the government can make more money with which to pay off its debts. 
B) that the private sector can only make zero economic profit. 
C) that the private sector will operate more efficiently than the public sector. 
D) that the government can devote more time to administrative matters. 
E) the government can keep a track of the activities of the private sector. 
A) that the government can make more money with which to pay off its debts. 
B) that the private sector can only make zero economic profit. 
C) that the private sector will operate more efficiently than the public sector. 
D) that the government can devote more time to administrative matters. 
E) the government can keep a track of the activities of the private sector.

Question 7

The first phase of antitrust policy in the U.S.began with the passage of the Sherman Antitrust Act in 1890.To judge a firm's action,the courts in this period used:

Accepted Answer

A) a per se rule. 
B) a rule of reason. 
C) a rule of thumb. 
D) the 80-20 rule. 
E) strict enforcement rule. 
A) a per se rule. 
B) a rule of reason. 
C) a rule of thumb. 
D) the 80-20 rule. 
E) strict enforcement rule.

Question 8

Economic freedom refers to the freedom of the government to control resources and labor in a country.

Accepted Answer

A) True 
 B)False

Question 9

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 12.1   In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
-Refer to Figure 12.1.The natural monopolist will charge a price equal to:

Accepted Answer

A) P4. 
B) P3. 
C) P2. 
D) P1. 
E) P5. 
A) P4. 
B) P3. 
C) P2. 
D) P1. 
E) P5.

Question 10

Which of the following statements best describes the difference between economic regulation and social regulation?

Accepted Answer

A) Economic regulation has little to do with price and output while social regulation explicitly deals with price and output. 
B) Social regulation is concerned with directly redistributing wealth while economic regulation is concerned with accumulation of wealth. 
C) Economic regulation is concerned with directly redistributing wealth while social regulation is concerned with accumulation of wealth. 
D) Social regulation has historically targeted industries such as railroads and airlines while economic regulation has all the industries under its purview. 
E) Economic regulation deals with price and output ,while social regulation deals with health and safety matters that apply across several industries. 
A) Economic regulation has little to do with price and output while social regulation explicitly deals with price and output. 
B) Social regulation is concerned with directly redistributing wealth while economic regulation is concerned with accumulation of wealth. 
C) Economic regulation is concerned with directly redistributing wealth while social regulation is concerned with accumulation of wealth. 
D) Social regulation has historically targeted industries such as railroads and airlines while economic regulation has all the industries under its purview. 
E) Economic regulation deals with price and output ,while social regulation deals with health and safety matters that apply across several industries.

Question 11

Which of the following practices is restricted by the antitrust laws of the United States?

Accepted Answer

A) Merger of smaller firms into a large firm 
B) Entry of new firms in the long run 
C) Standardization of products in a market 
D) Exit of non-performing firms in the long run 
E) Quality differentiation by competitive firms 
A) Merger of smaller firms into a large firm 
B) Entry of new firms in the long run 
C) Standardization of products in a market 
D) Exit of non-performing firms in the long run 
E) Quality differentiation by competitive firms

Question 12

If there are 50 firms in the industry,and each have an equal market share,the Herfindahl index will be equal to 1,00,000.

Accepted Answer

A) True 
 B)False

Question 13

If a market is narrowly defined,the market share of each firm declines than if it is broadly defined.

Accepted Answer

A) True 
 B)False

Question 14

The most reliable measure of market concentration is:

Accepted Answer

A) the Cost of Living index. 
B) the Herfindahl index. 
C) the Market index. 
D) the Market-Value weighted index. 
E) the Wholesale Price index. 
A) the Cost of Living index. 
B) the Herfindahl index. 
C) the Market index. 
D) the Market-Value weighted index. 
E) the Wholesale Price index.

Question 15

Delegates from different countries of the world met at Geneva in April 1947 which resulted in the formation of the first global trade agreement.Its main objective was:

Accepted Answer

A) to create multiple trade barriers in the member countries. 
B) to enable the member countries to maintain their autarkic conditions. 
C) to provide security to the domestic producers of the member countries by prohibiting international trade. 
D) to create an atmosphere of economic rivalry in the international sphere. 
E) to liberalize trade for mutual prosperity of the members. 
A) to create multiple trade barriers in the member countries. 
B) to enable the member countries to maintain their autarkic conditions. 
C) to provide security to the domestic producers of the member countries by prohibiting international trade. 
D) to create an atmosphere of economic rivalry in the international sphere. 
E) to liberalize trade for mutual prosperity of the members.

Question 16

Cities and local governments in the United States have contracted out many services in the recent years.It implies that:

Accepted Answer

A) government has taken over the ownership of many firms in the service sector. 
B) private firms are now providing certain services for a government entity. 
C) government has surrendered its ownership of public assets to private individuals. 
D) the government is the sole purchaser of certain services provided by the private firms. 
E) the government has borrowed funds from large private firms. 
A) government has taken over the ownership of many firms in the service sector. 
B) private firms are now providing certain services for a government entity. 
C) government has surrendered its ownership of public assets to private individuals. 
D) the government is the sole purchaser of certain services provided by the private firms. 
E) the government has borrowed funds from large private firms.

Question 17

Which of the following laws was enacted to forbid monopolization and attempts to monopolize?

Accepted Answer

A) The Anti-Monopoly Act 
B) The Sherman Antitrust Act 
C) The Clayton Antitrust Act 
D) The Federal Trade Commission Act 
E) The Celler-Kefauver Act 
A) The Anti-Monopoly Act 
B) The Sherman Antitrust Act 
C) The Clayton Antitrust Act 
D) The Federal Trade Commission Act 
E) The Celler-Kefauver Act

Question 18

The antitrust laws in the United States were created in the late 1800s as a result of :

Accepted Answer

A) the emergence of large and dominant businesses in railroads,steel,oil,mining and finance. 
B) the government decision to take responsibility for the improvement of trade deficit. 
C) the first illegal cartel,created in late 1800s. 
D) a steep decline in prices of primary goods in the United States. 
E) the United States being threatened by an external aggression. 
A) the emergence of large and dominant businesses in railroads,steel,oil,mining and finance. 
B) the government decision to take responsibility for the improvement of trade deficit. 
C) the first illegal cartel,created in late 1800s. 
D) a steep decline in prices of primary goods in the United States. 
E) the United States being threatened by an external aggression.

Question 19

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 12.1   In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
-Refer to Figure 12.1.If the regulatory agency sets the fair-rate-of-return price,the monopolist will:

Accepted Answer

A) suspend production. 
B) just break even. 
C) earn super normal profits. 
D) incur losses. 
E) be able to cover only the variable costs. 
A) suspend production. 
B) just break even. 
C) earn super normal profits. 
D) incur losses. 
E) be able to cover only the variable costs.

Question 20

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 12.1   In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
-According to Figure 12.1,to attain allocative efficiency the regulatory body must attempt to set the price equal to:

Accepted Answer

A) P2. 
B) P3. 
C) P1. 
D) P4. 
E) P5. 
A) P2. 
B) P3. 
C) P1. 
D) P4. 
E) P5.

Which of the following is true ofthe General Agreement on Tariffs and Trade (GATT)?

Regulation of monopolies is justified on the ground that a monopolist sells too less at a too high price.

Suppose that the demand for apples in Washington is elastic and the supply is inelastic.If the government of Washington passes a law prohibiting the use of synthetic pesticides that increases the marginal and average costs of producing apples,then:

Restrictions on the types of food additives that breakfast cereal manufacturers can use is an example of a social regulation.

According to the Index of Economic Freedom,which of the following is the freest economy in the world?

The argument made in favor of privatization is:

The first phase of antitrust policy in the U.S.began with the passage of the Sherman Antitrust Act in 1890.To judge a firm's action,the courts in this period used:

Economic freedom refers to the freedom of the government to control resources and labor in a country.

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 12.1 In the figure, D: Demand curve MR: Marginal revenue curve MC: Marginal cost curve ATC: Average total cost curve -Refer to Figure 12.1.The natural monopolist will charge a price equal to:

Which of the following statements best describes the difference between economic regulation and social regulation?

Which of the following practices is restricted by the antitrust laws of the United States?

If there are 50 firms in the industry,and each have an equal market share,the Herfindahl index will be equal to 1,00,000.

If a market is narrowly defined,the market share of each firm declines than if it is broadly defined.

The most reliable measure of market concentration is:

Delegates from different countries of the world met at Geneva in April 1947 which resulted in the formation of the first global trade agreement.Its main objective was:

Cities and local governments in the United States have contracted out many services in the recent years.It implies that:

Which of the following laws was enacted to forbid monopolization and attempts to monopolize?

The antitrust laws in the United States were created in the late 1800s as a result of :

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

Filters

Exam 12: Antitrust and Regulation

Which of the following is true ofthe General Agreement on Tariffs and Trade (GATT)?

Regulation of monopolies is justified on the ground that a monopolist sells too less at a too high price.

Suppose that the demand for apples in Washington is elastic and the supply is inelastic.If the government of Washington passes a law prohibiting the use of synthetic pesticides that increases the marginal and average costs of producing apples,then:

Restrictions on the types of food additives that breakfast cereal manufacturers can use is an example of a social regulation.

According to the Index of Economic Freedom,which of the following is the freest economy in the world?

The argument made in favor of privatization is:

The first phase of antitrust policy in the U.S.began with the passage of the Sherman Antitrust Act in 1890.To judge a firm's action,the courts in this period used:

Economic freedom refers to the freedom of the government to control resources and labor in a country.

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 12.1 In the figure, D: Demand curve MR: Marginal revenue curve MC: Marginal cost curve ATC: Average total cost curve -Refer to Figure 12.1.The natural monopolist will charge a price equal to:

Which of the following statements best describes the difference between economic regulation and social regulation?

Which of the following practices is restricted by the antitrust laws of the United States?

If there are 50 firms in the industry,and each have an equal market share,the Herfindahl index will be equal to 1,00,000.

If a market is narrowly defined,the market share of each firm declines than if it is broadly defined.

The most reliable measure of market concentration is:

Delegates from different countries of the world met at Geneva in April 1947 which resulted in the formation of the first global trade agreement.Its main objective was:

Cities and local governments in the United States have contracted out many services in the recent years.It implies that:

Which of the following laws was enacted to forbid monopolization and attempts to monopolize?

The antitrust laws in the United States were created in the late 1800s as a result of :

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

Filters