Question 1

In average cost pricing, the natural monopoly would have to set price equal to

Accepted Answer

A)  AFC. 
B)  AVC. 
C)  ATC. 
D)  MC. 
A)  AFC. 
B)  AVC. 
C)  ATC. 
D)  MC.

Question 2

"Regulations do not always have the intended result." Do you agree or disagree? Why?

Accepted Answer

Agree. Firms often try to avoid the effe

Question 3

The lemons problem occurs mainly because of

Accepted Answer

A)  asymmetric information. 
B)  a market failure. 
C)  negative externality. 
D)  a monopoly. 
A)  asymmetric information. 
B)  a market failure. 
C)  negative externality. 
D)  a monopoly.

Question 4

Which of the following statements can correctly be made about social regulation? I. Extensive social regulation may have an anticompetitive effect.
II) The benefits of social regulation are easier to measure than are the costs of social regulation.

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II

Question 5

The Sherman Antitrust Act was enforced in 1906 by a ruling of the Supreme Court regarding the monopolization of the oil industry by

Accepted Answer

A)  Getty Oil of Oklahoma. 
B)  Texaco Oil of Texas. 
C)  Gulf Oil of Pennsylvania. 
D)  Standard Oil of New Jersey. 
A)  Getty Oil of Oklahoma. 
B)  Texaco Oil of Texas. 
C)  Gulf Oil of Pennsylvania. 
D)  Standard Oil of New Jersey.

Question 6

Which of the following is exempt from antitrust laws?

Accepted Answer

A)  Professional basketball 
B)  Suppliers of military equipment 
C)  Telephone companies 
D)  Automobile companies 
A)  Professional basketball 
B)  Suppliers of military equipment 
C)  Telephone companies 
D)  Automobile companies

Question 7

All of the following are exempted from antitrust laws EXCEPT

Accepted Answer

A)  labor unions. 
B)  Microsoft Windows. 
C)  professional baseball. 
D)  hospitals. 
A)  labor unions. 
B)  Microsoft Windows. 
C)  professional baseball. 
D)  hospitals.

Question 8

This agency regulates workplace safety and health conditions.

Accepted Answer

A)  Environmental Protection Agency 
B)  Consumer Product Safety Commission 
C)  Equal Employment Opportunity Commission 
D)  Occupational Safety and Health Administration 
A)  Environmental Protection Agency 
B)  Consumer Product Safety Commission 
C)  Equal Employment Opportunity Commission 
D)  Occupational Safety and Health Administration

Question 9

The idea behind antitrust legislation is to

Accepted Answer

A)  promote competition in the market. 
B)  justify deregulation of industries. 
C)  implement contestable markets. 
D)  create larger firms. 
A)  promote competition in the market. 
B)  justify deregulation of industries. 
C)  implement contestable markets. 
D)  create larger firms.

Question 10

Which of the following is FALSE with respect to regulation?

Accepted Answer

A)  Regulated firms commonly try to avoid the effects of regulation whenever they can. 
B)  Firms engage in creative responses which conform to the letter of the law but undermine its spirit. 
C)  Regulation has resulted in state laws that have made creative response illegal in many states. 
D)  Recent regulations have generated feedback effects that undermined the key aim of the rules. 
A)  Regulated firms commonly try to avoid the effects of regulation whenever they can. 
B)  Firms engage in creative responses which conform to the letter of the law but undermine its spirit. 
C)  Regulation has resulted in state laws that have made creative response illegal in many states. 
D)  Recent regulations have generated feedback effects that undermined the key aim of the rules.

Question 11

Regulation imposed by such organizations as the Food and Drug Administration or the Environmental Protection Agency seeking to protect the welfare of people in our nation is referred to as

Accepted Answer

A)  moral regulation. 
B)  natural regulation. 
C)  rate-of-return regulation. 
D)  social regulation. 
A)  moral regulation. 
B)  natural regulation. 
C)  rate-of-return regulation. 
D)  social regulation.

Question 12

According to your text, the annual cost of regulation (federal, state and local) in the United States is estimated to exceed ________ per year.

Accepted Answer

A)  $500 million 
B)  $900 million 
C)  $50 billion 
D)  $1 trillion 
A)  $500 million 
B)  $900 million 
C)  $50 billion 
D)  $1 trillion

Question 13

Which of the following statements about natural monopoly is correct?

Accepted Answer

A)  Governments regulate natural monopolies in order to ensure that costs of production are minimized. 
B)  Governments regulate natural monopolies in order to ensure that the firm earns a normal profit. 
C)  Governments regulate natural monopolies in order to prevent them from making profits. 
D)  Governments regulate natural monopolies in order to keep their workers from earning wages that are too high. 
A)  Governments regulate natural monopolies in order to ensure that costs of production are minimized. 
B)  Governments regulate natural monopolies in order to ensure that the firm earns a normal profit. 
C)  Governments regulate natural monopolies in order to prevent them from making profits. 
D)  Governments regulate natural monopolies in order to keep their workers from earning wages that are too high.

Question 14

Suppose a dangerous workplace is made safer through the installation of guards and other equipment that reduce the physical hazards of the work environment. If we observe no reduction in injuries, we might conclude that

Accepted Answer

A)  the safety equipment isn't adequate and better equipment should be installed. 
B)  the firm has responded by lowering wages and hiring less capable people who are more likely to be injured. 
C)  the injury rate before installation of the safety equipment had been underreported. 
D)  workers responded to the safer environment by not exercising as much care themselves, generating more injuries than if they had not changed their behavior. 
A)  the safety equipment isn't adequate and better equipment should be installed. 
B)  the firm has responded by lowering wages and hiring less capable people who are more likely to be injured. 
C)  the injury rate before installation of the safety equipment had been underreported. 
D)  workers responded to the safer environment by not exercising as much care themselves, generating more injuries than if they had not changed their behavior.

Question 15

Which of the following is NOT a government response to asymmetric information?

Accepted Answer

A)  Liability laws 
B)  Social regulation 
C)  Manufacturer's warranties 
D)  Government licensing 
A)  Liability laws 
B)  Social regulation 
C)  Manufacturer's warranties 
D)  Government licensing

Question 16

The type of regulation that attempts to keep prices and the rate of return in an industry at a competitive level is referred to as

Accepted Answer

A)  cost-of-service regulation. 
B)  rate-of-return regulation. 
C)  service-opportunity regulation. 
D)  natural regulation. 
A)  cost-of-service regulation. 
B)  rate-of-return regulation. 
C)  service-opportunity regulation. 
D)  natural regulation.

Question 17

Regulation focused on the impact of production on the environment and society, the working conditions under which production occurs, or the physical attributes of goods, is known as

Accepted Answer

A)  cost-of-service regulation. 
B)  rate-of-return regulation. 
C)  social regulation. 
D)  monopoly regulation. 
A)  cost-of-service regulation. 
B)  rate-of-return regulation. 
C)  social regulation. 
D)  monopoly regulation.

Question 18

The two basic types of government regulation are

Accepted Answer

A)  monopoly and oligopoly regulation. 
B)  labor and environmental regulation. 
C)  federal and state industrial regulation. 
D)  economic and social regulation. 
A)  monopoly and oligopoly regulation. 
B)  labor and environmental regulation. 
C)  federal and state industrial regulation. 
D)  economic and social regulation.

Question 19

One of the agencies responsible for enforcement of antitrust policy is

Accepted Answer

A)  the Trust Division of Congress. 
B)  the Federal Trade Commission. 
C)  the World Trade Organization. 
D)  the Food and Drug Administration. 
A)  the Trust Division of Congress. 
B)  the Federal Trade Commission. 
C)  the World Trade Organization. 
D)  the Food and Drug Administration.

Question 20

The Supreme Court has defined the offense of monopolization to

Accepted Answer

A)  be when only one firm exists in an industry. 
B)  occur when asymmetric information exists. 
C)  include the possession of monopoly power and the willful maintenance of that power. 
D)  be unfair acts in the practice of commerce. 
A)  be when only one firm exists in an industry. 
B)  occur when asymmetric information exists. 
C)  include the possession of monopoly power and the willful maintenance of that power. 
D)  be unfair acts in the practice of commerce.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

In average cost pricing, the natural monopoly would have to set price equal to

"Regulations do not always have the intended result." Do you agree or disagree? Why?

The lemons problem occurs mainly because of

Which of the following statements can correctly be made about social regulation? I. Extensive social regulation may have an anticompetitive effect. II) The benefits of social regulation are easier to measure than are the costs of social regulation.

The Sherman Antitrust Act was enforced in 1906 by a ruling of the Supreme Court regarding the monopolization of the oil industry by

Which of the following is exempt from antitrust laws?

All of the following are exempted from antitrust laws EXCEPT

This agency regulates workplace safety and health conditions.

The idea behind antitrust legislation is to

Which of the following is FALSE with respect to regulation?

Regulation imposed by such organizations as the Food and Drug Administration or the Environmental Protection Agency seeking to protect the welfare of people in our nation is referred to as

According to your text, the annual cost of regulation (federal, state and local) in the United States is estimated to exceed ________ per year.

Which of the following statements about natural monopoly is correct?

Suppose a dangerous workplace is made safer through the installation of guards and other equipment that reduce the physical hazards of the work environment. If we observe no reduction in injuries, we might conclude that

Which of the following is NOT a government response to asymmetric information?

The type of regulation that attempts to keep prices and the rate of return in an industry at a competitive level is referred to as

Regulation focused on the impact of production on the environment and society, the working conditions under which production occurs, or the physical attributes of goods, is known as

The two basic types of government regulation are

One of the agencies responsible for enforcement of antitrust policy is

The Supreme Court has defined the offense of monopolization to

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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