Question 1

When Microsoft put together a set of products with the Windows operating system, it was practicing

Accepted Answer

A)  bundling. 
B)  tie-in sales. 
C)  versioning. 
D)  compacting. 
A)  bundling. 
B)  tie-in sales. 
C)  versioning. 
D)  compacting.

Question 2

-In the above figure, which of the following statements is FALSE if the firm is operating at output level Q2?

Accepted Answer

A)  The output is equivalent to an unregulated monopolist. 
B)  Economic profits are positive. 
C)  The price is lower than at an equivalent firm forced by regulators to charge ATC pricing. 
D)  Average costs would be lowered by expanding output. 
A)  The output is equivalent to an unregulated monopolist. 
B)  Economic profits are positive. 
C)  The price is lower than at an equivalent firm forced by regulators to charge ATC pricing. 
D)  Average costs would be lowered by expanding output.

Question 3

The primary antitrust statute in the United States is the

Accepted Answer

A)  NLRA of 1935. 
B)  SEC Act of 1933. 
C)  Sherman Antitrust Act of 1890. 
D)  Federal Reserve Act of 1913. 
A)  NLRA of 1935. 
B)  SEC Act of 1933. 
C)  Sherman Antitrust Act of 1890. 
D)  Federal Reserve Act of 1913.

Question 4

Which of the following is a government response to asymmetric information?

Accepted Answer

A)  Product guarantees 
B)  External product certification 
C)  Manufacturer's warranties 
D)  Government licensing 
A)  Product guarantees 
B)  External product certification 
C)  Manufacturer's warranties 
D)  Government licensing

Question 5

The purpose of social regulation is

Accepted Answer

A)  to force a firm to produce at the point where marginal cost equals marginal revenue. 
B)  to control the quality of service provided by a monopolist. 
C)  to control the price that regulated enterprises are allowed to charge. 
D)  to focus on the impact of production on the environment and society, the working conditions under which goods and services are produced, and sometimes the physical attributes of goods. 
A)  to force a firm to produce at the point where marginal cost equals marginal revenue. 
B)  to control the quality of service provided by a monopolist. 
C)  to control the price that regulated enterprises are allowed to charge. 
D)  to focus on the impact of production on the environment and society, the working conditions under which goods and services are produced, and sometimes the physical attributes of goods.

Question 6

The reason an unregulated natural monopolist will produce at an economically inefficient quantity is

Accepted Answer

A)  due to the fact that the monopolist will equate marginal cost with price to determine the output level. 
B)  due to the fact that the monopolist will equate average total cost with price to determine the output level. 
C)  that the price does not equal the true marginal cost of producing the good. 
D)  that the monopolist will produce a quantity greater than the minimum of the average total cost curve. 
A)  due to the fact that the monopolist will equate marginal cost with price to determine the output level. 
B)  due to the fact that the monopolist will equate average total cost with price to determine the output level. 
C)  that the price does not equal the true marginal cost of producing the good. 
D)  that the monopolist will produce a quantity greater than the minimum of the average total cost curve.

Question 7

A major shortcoming of the Sherman Act was that

Accepted Answer

A)  when it was passed, there were no violations, so the Supreme Court ruled it unnecessary. 
B)  it failed to explicitly state which specific activities were illegal. 
C)  violators of the Act were forced out of business. 
D)  it was not enforced by the courts. 
A)  when it was passed, there were no violations, so the Supreme Court ruled it unnecessary. 
B)  it failed to explicitly state which specific activities were illegal. 
C)  violators of the Act were forced out of business. 
D)  it was not enforced by the courts.

Question 8

How does social regulation differ from economic regulation?

Accepted Answer

Social regulation focuses on the impact

Question 9

Regulators usually encourage natural monopolists to engage in

Accepted Answer

A)  marginal cost pricing. 
B)  average cost pricing. 
C)  marginal cost pricing, with subsidies from the government offsetting the losses. 
D)  inefficient pricing. 
A)  marginal cost pricing. 
B)  average cost pricing. 
C)  marginal cost pricing, with subsidies from the government offsetting the losses. 
D)  inefficient pricing.

Question 10

Asymmetric information is

Accepted Answer

A)  when a market failure occurs. 
B)  an externality. 
C)  when the producer has information on the product that the consumer lacks. 
D)  the regulatory price for a natural monopoly. 
A)  when a market failure occurs. 
B)  an externality. 
C)  when the producer has information on the product that the consumer lacks. 
D)  the regulatory price for a natural monopoly.

Question 11

The "primary motive" of regulators, according to the share-the-gains, share-the-pains theory, is to

Accepted Answer

A)  maximize their income through accepting monetary payoffs from groups. 
B)  ensure that every group gets what it wants. 
C)  ensure that all customers share the benefits of regulation, and not just the wealthiest consumers. 
D)  keep their jobs. 
A)  maximize their income through accepting monetary payoffs from groups. 
B)  ensure that every group gets what it wants. 
C)  ensure that all customers share the benefits of regulation, and not just the wealthiest consumers. 
D)  keep their jobs.

Question 12

If government regulators make the natural monopolist set price equal to marginal cost

Accepted Answer

A)  the natural monopolist will make zero economic profits. 
B)  the natural monopolist will make normal profits. 
C)  the natural monopolist will make losses and go out of business. 
D)  the natural monopolist will make positive economic profits larger than if it wasn't regulated at all. 
A)  the natural monopolist will make zero economic profits. 
B)  the natural monopolist will make normal profits. 
C)  the natural monopolist will make losses and go out of business. 
D)  the natural monopolist will make positive economic profits larger than if it wasn't regulated at all.

Question 13

The federal regulatory agency whose mission is to regulate workplace health and safety is the

Accepted Answer

A)  AFL-CIO. 
B)  FTC. 
C)  OSHA. 
D)  SEC. 
A)  AFL-CIO. 
B)  FTC. 
C)  OSHA. 
D)  SEC.

Question 14

If a public service commission requires a natural monopoly to set its price equal to the long-run marginal cost, this will result in

Accepted Answer

A)  excessive economic profits to the monopoly. 
B)  normal economic profits to the monopoly. 
C)  losses to the monopoly. 
D)  either economic profits or losses, depending on the efficiency of the monopoly. 
A)  excessive economic profits to the monopoly. 
B)  normal economic profits to the monopoly. 
C)  losses to the monopoly. 
D)  either economic profits or losses, depending on the efficiency of the monopoly.

Question 15

Suppose OSHA requires a factory to install specific safety equipment to reduce the number of injuries in the factory. Would the number of accidents necessarily decline? Why or why not?

Accepted Answer

No. If the feedback effect is

Question 16

One of the elements of monopolization is

Accepted Answer

A)  having a monopoly. 
B)  wanting to be a monopoly and wanting to earn monopoly profits. 
C)  monopoly pricing. 
D)  the willful acquisition of monopoly power. 
A)  having a monopoly. 
B)  wanting to be a monopoly and wanting to earn monopoly profits. 
C)  monopoly pricing. 
D)  the willful acquisition of monopoly power.

Question 17

One type of economic regulation often used in the United States by various public utility commissions allows prices to reflect only the actual cost of production and no monopoly profits. This type of economic regulation is known as

Accepted Answer

A)  rate-of-return regulation. 
B)  cost-of-service regulation. 
C)  price per constant-quality-unit regulation. 
D)  creative response regulation. 
A)  rate-of-return regulation. 
B)  cost-of-service regulation. 
C)  price per constant-quality-unit regulation. 
D)  creative response regulation.

Question 18

The benefits of social regulation are

Accepted Answer

A)  easy to measure by the marginal value method. 
B)  often difficult to measure. 
C)  obvious to almost everyone, but the costs are usually hidden. 
D)  greater than the costs of social regulation in every example in the country today. 
A)  easy to measure by the marginal value method. 
B)  often difficult to measure. 
C)  obvious to almost everyone, but the costs are usually hidden. 
D)  greater than the costs of social regulation in every example in the country today.

Question 19

Defining the "relevant market" involves looking at two components. They are

Accepted Answer

A)  the competitive market and the dominant market. 
B)  the local market and the national market. 
C)  the geographic market and the product market. 
D)  the goods market and the services market. 
A)  the competitive market and the dominant market. 
B)  the local market and the national market. 
C)  the geographic market and the product market. 
D)  the goods market and the services market.

Question 20

The notion that regulated industry members themselves, sooner or later, are able to control regulatory bodies is referred to as

Accepted Answer

A)  consumerism. 
B)  cartelization. 
C)  the capture theory. 
D)  the control theory. 
A)  consumerism. 
B)  cartelization. 
C)  the capture theory. 
D)  the control theory.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

When Microsoft put together a set of products with the Windows operating system, it was practicing

-In the above figure, which of the following statements is FALSE if the firm is operating at output level Q2?

The primary antitrust statute in the United States is the

Which of the following is a government response to asymmetric information?

The purpose of social regulation is

The reason an unregulated natural monopolist will produce at an economically inefficient quantity is

A major shortcoming of the Sherman Act was that

How does social regulation differ from economic regulation?

Regulators usually encourage natural monopolists to engage in

Asymmetric information is

The "primary motive" of regulators, according to the share-the-gains, share-the-pains theory, is to

If government regulators make the natural monopolist set price equal to marginal cost

The federal regulatory agency whose mission is to regulate workplace health and safety is the

If a public service commission requires a natural monopoly to set its price equal to the long-run marginal cost, this will result in

Suppose OSHA requires a factory to install specific safety equipment to reduce the number of injuries in the factory. Would the number of accidents necessarily decline? Why or why not?

One of the elements of monopolization is

One type of economic regulation often used in the United States by various public utility commissions allows prices to reflect only the actual cost of production and no monopoly profits. This type of economic regulation is known as

The benefits of social regulation are

Defining the "relevant market" involves looking at two components. They are

The notion that regulated industry members themselves, sooner or later, are able to control regulatory bodies is referred to as

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

-In the above figure, which of the following statements is FALSE if the firm is operating at output level Q₂?