Question 1

The first antitrust law that the U.S. Congress enacted was

Accepted Answer

A)  the Clayton Antitrust Act. 
B)  the Sherman Antitrust Act. 
C)  the Robinson-Patman Act. 
D)  the Federal Trade Commission Act. 
A)  the Clayton Antitrust Act. 
B)  the Sherman Antitrust Act. 
C)  the Robinson-Patman Act. 
D)  the Federal Trade Commission Act.

Question 2

-Refer to the above figure. An unregulated natural monopolist would choose

Accepted Answer

A)  output rate of   and price   . 
B)  output rate   and price   . 
C)  output rate   and price   . 
D)  output rate   and price   . 
A)  output rate of   and price   . 
B)  output rate   and price   . 
C)  output rate   and price   . 
D)  output rate   and price   .

Question 3

The major goal of social regulation is

Accepted Answer

A)  a better quality of life through a less polluted environment, better working conditions, and safer and better products. 
B)  to make sure that firms are not earning monopoly profits. 
C)  to make sure that prices are kept low enough so that every person can purchase the good. 
D)  to make sure that the firm produces at the socially optimal point of production. 
A)  a better quality of life through a less polluted environment, better working conditions, and safer and better products. 
B)  to make sure that firms are not earning monopoly profits. 
C)  to make sure that prices are kept low enough so that every person can purchase the good. 
D)  to make sure that the firm produces at the socially optimal point of production.

Question 4

-Refer to the above figure. If the government requires the natural monopolist to charge the efficient price, it will charge price

Accepted Answer

A)    and sell   units. 
B)    and sell   units. 
C)    and sell   units. 
D)    and sell   units. 
A)    and sell   units. 
B)    and sell   units. 
C)    and sell   units. 
D)    and sell   units.

Question 5

Which of the following would most likely promote competitive pricing of products?

Accepted Answer

A)  Robinson-Patman Act 
B)  Wheeler-Lea Act 
C)  Federal Trade Commission Act 
D)  Clayton Act 
A)  Robinson-Patman Act 
B)  Wheeler-Lea Act 
C)  Federal Trade Commission Act 
D)  Clayton Act

Question 6

A firm that responds to a regulatory rule in a way that permits technical compliance while allowing the firm to violate the spirit of the regulation has.

Accepted Answer

A)  reduced the scope of the lemons problem. 
B)  shared the gains and pains of regulation. 
C)  engaged in a creative response to regulation. 
D)  become a captured regulator. 
A)  reduced the scope of the lemons problem. 
B)  shared the gains and pains of regulation. 
C)  engaged in a creative response to regulation. 
D)  become a captured regulator.

Question 7

What is the main difference between economic regulation and social regulation?

Accepted Answer

Economic regulation involves only partic

Question 8

A natural monopoly that is not regulated will choose to produce at the

Accepted Answer

A)  minimum point of the long-run average cost curve. 
B)  point at which marginal cost is above average total cost. 
C)  point at which the demand curve intersects the long-run average cost curve. 
D)  point at which marginal revenue equals marginal cost. 
A)  minimum point of the long-run average cost curve. 
B)  point at which marginal cost is above average total cost. 
C)  point at which the demand curve intersects the long-run average cost curve. 
D)  point at which marginal revenue equals marginal cost.

Question 9

The possession of monopoly power and the willful acquisition of that power is

Accepted Answer

A)  defined in the Sherman Antitrust Act as monopolization. 
B)  defined by the Supreme Court as monopolization. 
C)  not defined as monopolization until a statement about profits is included. 
D)  not the definition of monopolization. 
A)  defined in the Sherman Antitrust Act as monopolization. 
B)  defined by the Supreme Court as monopolization. 
C)  not defined as monopolization until a statement about profits is included. 
D)  not the definition of monopolization.

Question 10

Why do government regulators not enforce marginal cost pricing for natural monopolies? What are the common regulatory solutions?

Accepted Answer

If government regulators enforce margina

Question 11

A natural monopoly exists when

Accepted Answer

A)  control of a key input leads to a single-firm industry. 
B)  increasing marginal returns and the ability to obtain quantity discounts from suppliers leads to a single-firm industry. 
C)  economies of large-scale production are substantial, leading to a single-firm industry. 
D)  the government restricts entry that leads to a single-firm industry. 
A)  control of a key input leads to a single-firm industry. 
B)  increasing marginal returns and the ability to obtain quantity discounts from suppliers leads to a single-firm industry. 
C)  economies of large-scale production are substantial, leading to a single-firm industry. 
D)  the government restricts entry that leads to a single-firm industry.

Question 12

Which of the following statements regarding economic regulation is TRUE?

Accepted Answer

A)  Economic regulation has failed by insisting that firms must be allowed to earn a normal rate of return. 
B)  Rate-of-return regulation has been much more effective than cost-of-service regulation. 
C)  Economic regulation deals only with rates of return, and not with prices. 
D)  Economic regulation deals mainly with prices firms charge, but firms can alter their return by altering quality of service, effectively raising the price per constant-quality-unit. 
A)  Economic regulation has failed by insisting that firms must be allowed to earn a normal rate of return. 
B)  Rate-of-return regulation has been much more effective than cost-of-service regulation. 
C)  Economic regulation deals only with rates of return, and not with prices. 
D)  Economic regulation deals mainly with prices firms charge, but firms can alter their return by altering quality of service, effectively raising the price per constant-quality-unit.

Question 13

According to the Justice Department and the Federal Trade Commission, a merger would likely be challenged if

Accepted Answer

A)  the post-merger industry has an HHI above 1,000 and the HHI rises by more than 100. 
B)  the post-merger industry has an HHI above 500 and the HHI rises by more than 50. 
C)  the number of firms in the post-merger industry is very large. 
D)  the firms' markets are very large. 
A)  the post-merger industry has an HHI above 1,000 and the HHI rises by more than 100. 
B)  the post-merger industry has an HHI above 500 and the HHI rises by more than 50. 
C)  the number of firms in the post-merger industry is very large. 
D)  the firms' markets are very large.

Question 14

The Supreme Court's decision in the Standard Oil of New Jersey case was

Accepted Answer

A)  to force the company to send refund checks to customers. 
B)  to force the company to pay $10 billion in fines. 
C)  to increase the fine imposed by a lower court. 
D)  to break up the company. 
A)  to force the company to send refund checks to customers. 
B)  to force the company to pay $10 billion in fines. 
C)  to increase the fine imposed by a lower court. 
D)  to break up the company.

Question 15

The regulation of the prices charged by insurance companies is known as

Accepted Answer

A)  the Federal Register. 
B)  social regulation. 
C)  the market share test. 
D)  economic regulation. 
A)  the Federal Register. 
B)  social regulation. 
C)  the market share test. 
D)  economic regulation.

Question 16

The theory of regulatory behavior that suggests that regulators must consider the demands of legislators, consumers, and members of the regulated agency is called

Accepted Answer

A)  the capture theory. 
B)  share-the-gains, share-the-pains theory. 
C)  the natural theory. 
D)  the creative theory. 
A)  the capture theory. 
B)  share-the-gains, share-the-pains theory. 
C)  the natural theory. 
D)  the creative theory.

Question 17

During the production process Ajax Corporation releases pollution into the air. Ajax Corporation operates in a monopolistic competitive industry. Which of the following statements addresses the pollution situation?

Accepted Answer

A)  Ajax is taking advantage of asymmetric information. 
B)  This is an example of a market failure and is a reason for the government to regulate the industry. 
C)  The quality of the product could be improved if the amount of pollution can be reduced. 
D)  This is known as the lemons problem. 
A)  Ajax is taking advantage of asymmetric information. 
B)  This is an example of a market failure and is a reason for the government to regulate the industry. 
C)  The quality of the product could be improved if the amount of pollution can be reduced. 
D)  This is known as the lemons problem.

Question 18

The feedback effect can be thought of as a type of

Accepted Answer

A)  social regulation. 
B)  economic regulation. 
C)  creative response, which reduces the law's effectiveness. 
D)  regulatory lag. 
A)  social regulation. 
B)  economic regulation. 
C)  creative response, which reduces the law's effectiveness. 
D)  regulatory lag.

Question 19

"As compared to the benefits of economic and social regulation, the costs are minimal." Do you agree or disagree? Why?

Accepted Answer

Disagree. The total costs of regulation

Question 20

Clarke's gas station in Podunk only sells gasoline if customers also purchase oil.

Accepted Answer

A)  This is called a tie-in sale and is in violation of antitrust laws. 
B)  This is not in violation of antitrust laws, as cars need both oil and gas. 
C)  This is not in violation of antitrust laws, as consumers get the oil below market prices. 
D)  This is in violation of the Robinson-Patman Act. 
A)  This is called a tie-in sale and is in violation of antitrust laws. 
B)  This is not in violation of antitrust laws, as cars need both oil and gas. 
C)  This is not in violation of antitrust laws, as consumers get the oil below market prices. 
D)  This is in violation of the Robinson-Patman Act.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

The first antitrust law that the U.S. Congress enacted was

-Refer to the above figure. An unregulated natural monopolist would choose

The major goal of social regulation is

-Refer to the above figure. If the government requires the natural monopolist to charge the efficient price, it will charge price

Which of the following would most likely promote competitive pricing of products?

A firm that responds to a regulatory rule in a way that permits technical compliance while allowing the firm to violate the spirit of the regulation has.

What is the main difference between economic regulation and social regulation?

A natural monopoly that is not regulated will choose to produce at the

The possession of monopoly power and the willful acquisition of that power is

Why do government regulators not enforce marginal cost pricing for natural monopolies? What are the common regulatory solutions?

A natural monopoly exists when

Which of the following statements regarding economic regulation is TRUE?

According to the Justice Department and the Federal Trade Commission, a merger would likely be challenged if

The Supreme Court's decision in the Standard Oil of New Jersey case was

The regulation of the prices charged by insurance companies is known as

The theory of regulatory behavior that suggests that regulators must consider the demands of legislators, consumers, and members of the regulated agency is called

During the production process Ajax Corporation releases pollution into the air. Ajax Corporation operates in a monopolistic competitive industry. Which of the following statements addresses the pollution situation?

The feedback effect can be thought of as a type of

"As compared to the benefits of economic and social regulation, the costs are minimal." Do you agree or disagree? Why?

Clarke's gas station in Podunk only sells gasoline if customers also purchase oil.

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

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