Question 1

Which antitrust act was passed to protect independent retailers from "unfair discrimination" by chain stores?

Accepted Answer

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

Question 2

According to the capture hypothesis,

Accepted Answer

A)  regulators eventually support the views of consumers instead of the firms or the taxpayers, regardless of the reasons why the regulatory agency was established. 
B)  regulators support the view of the regulated firms all along because that is the reason the regulatory agency was established. 
C)  regulators eventually support the views of the regulated firms instead of the consumers or taxpayers, regardless of why the regulatory agency was established. 
D)  regulators eventually support the views of either the firms or the consumers, but at the expense of the taxpayers, regardless of the reasons why the regulatory agency was established. 
A)  regulators eventually support the views of consumers instead of the firms or the taxpayers, regardless of the reasons why the regulatory agency was established. 
B)  regulators support the view of the regulated firms all along because that is the reason the regulatory agency was established. 
C)  regulators eventually support the views of the regulated firms instead of the consumers or taxpayers, regardless of why the regulatory agency was established. 
D)  regulators eventually support the views of either the firms or the consumers, but at the expense of the taxpayers, regardless of the reasons why the regulatory agency was established.

Question 3

Financial markets are regulated by

Accepted Answer

A)  the Securities and Exchange Commission. 
B)  the Stock and Bond Exchange Commission. 
C)  the Security and Protection Commission. 
D)  the Stock and Exchange Commission. 
A)  the Securities and Exchange Commission. 
B)  the Stock and Bond Exchange Commission. 
C)  the Security and Protection Commission. 
D)  the Stock and Exchange Commission.

Question 4

Under rate-of-return regulation, average cost pricing

Accepted Answer

A)  is inflated so the firm can make economic profits. 
B)  includes variable costs but not a cost for capital. 
C)  includes what they consider to be a fair rate of return on investment. 
D)  includes a cost for capital that generates an above normal rate of return. 
A)  is inflated so the firm can make economic profits. 
B)  includes variable costs but not a cost for capital. 
C)  includes what they consider to be a fair rate of return on investment. 
D)  includes a cost for capital that generates an above normal rate of return.

Question 5

What are the major rationales for consumer protection in nonmonopolistic industries?

Accepted Answer

The main rationales for consumer protect

Question 6

If a natural monopolist is unregulated, then

Accepted Answer

A)  the monopoly will produce efficiently from society's point of view. 
B)  the monopoly will produce inefficiently from society's point of view. 
C)  the monopolist will be earning just a normal rate of return on investment. 
D)  the monopolist will determine the profit maximizing quantity by equating marginal cost to the demand curve. 
A)  the monopoly will produce efficiently from society's point of view. 
B)  the monopoly will produce inefficiently from society's point of view. 
C)  the monopolist will be earning just a normal rate of return on investment. 
D)  the monopolist will determine the profit maximizing quantity by equating marginal cost to the demand curve.

Question 7

All of the following are exempt from antitrust enforcement EXCEPT

Accepted Answer

A)  professional baseball. 
B)  labor unions. 
C)  hospitals. 
D)  television and radio stations. 
A)  professional baseball. 
B)  labor unions. 
C)  hospitals. 
D)  television and radio stations.

Question 8

The U.S. antitrust enforcers will likely block a merger if

Accepted Answer

A)  the merging firms already earn excessive profits. 
B)  the merging firms are in different markets. 
C)  the merger will substantially increase market power. 
D)  the degree of concentration declines as a result of the merger. 
A)  the merging firms already earn excessive profits. 
B)  the merging firms are in different markets. 
C)  the merger will substantially increase market power. 
D)  the degree of concentration declines as a result of the merger.

Question 9

As a result of a conviction under the Sherman Antitrust Act, Standard Oil of New Jersey

Accepted Answer

A)  was fined for its extensive price discriminating activity. 
B)  was restrained from oil exploration for twenty-five years, which enabled other oil firms to assume leadership in the industry. 
C)  was broken up into many smaller companies. 
D)  went bankrupt and no longer is in existence. 
A)  was fined for its extensive price discriminating activity. 
B)  was restrained from oil exploration for twenty-five years, which enabled other oil firms to assume leadership in the industry. 
C)  was broken up into many smaller companies. 
D)  went bankrupt and no longer is in existence.

Question 10

The two basic types of government regulation are

Accepted Answer

A)  economic regulation and monopoly regulation. 
B)  economic and social regulation. 
C)  social regulation and health and safety regulation. 
D)  social regulation and financial regulation. 
A)  economic regulation and monopoly regulation. 
B)  economic and social regulation. 
C)  social regulation and health and safety regulation. 
D)  social regulation and financial regulation.

Question 11

Regulators often adopt policies that benefit

Accepted Answer

A)  consumers and injure producers. 
B)  the firms regulated rather than consumers. 
C)  only the government. 
D)  no one. 
A)  consumers and injure producers. 
B)  the firms regulated rather than consumers. 
C)  only the government. 
D)  no one.

Question 12

Suppose that a regulatory agency has imposed marginal cost pricing on a natural monopolist. We expect that

Accepted Answer

A)  the firm will earn only a normal profit. 
B)  the firm's average total cost of production is rising over the relevant range of production. 
C)  the firm will earn economic profits. 
D)  the firm will eventually go out of business. 
A)  the firm will earn only a normal profit. 
B)  the firm's average total cost of production is rising over the relevant range of production. 
C)  the firm will earn economic profits. 
D)  the firm will eventually go out of business.

Question 13

The problem of excess pollution mainly occurs because of

Accepted Answer

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

Question 14

Which of the following is NOT an objective of economic regulation?

Accepted Answer

A)  to regulate the prices enterprises are allowed to charge 
B)  to fix prices so that they are never allowed to rise 
C)  to keep rates of return in an industry at a competitive level 
D)  to prevent monopoly profits 
A)  to regulate the prices enterprises are allowed to charge 
B)  to fix prices so that they are never allowed to rise 
C)  to keep rates of return in an industry at a competitive level 
D)  to prevent monopoly profits

Question 15

Social regulation is focused on all of the following EXCEPT

Accepted Answer

A)  the impact of production on the environment and society. 
B)  better working conditions, and safer and better products. 
C)  a better quality of life through a less polluted environment. 
D)  ensuring costs are minimized and benefits are maximized. 
A)  the impact of production on the environment and society. 
B)  better working conditions, and safer and better products. 
C)  a better quality of life through a less polluted environment. 
D)  ensuring costs are minimized and benefits are maximized.

Question 16

The first antitrust law in the United States was the

Accepted Answer

A)  FTC Act. 
B)  Clayton Act. 
C)  Sherman Act. 
D)  Robinson-Patman Act. 
A)  FTC Act. 
B)  Clayton Act. 
C)  Sherman Act. 
D)  Robinson-Patman Act.

Question 17

An unregulated natural monopolist would produce to the point at which

Accepted Answer

A)  P = AC. 
B)  MR = AC. 
C)  MR = MC. 
D)  P = MR. 
A)  P = AC. 
B)  MR = AC. 
C)  MR = MC. 
D)  P = MR.

Question 18

A firm that has taken advantage of economies of scale and expanded to become the only producer in the market is

Accepted Answer

A)  a cartel. 
B)  a natural monopoly. 
C)  a monopolistic competitor. 
D)  an oligopolist. 
A)  a cartel. 
B)  a natural monopoly. 
C)  a monopolistic competitor. 
D)  an oligopolist.

Question 19

An automobile manufacturer voluntarily recalls certain models to fix a defective part at no cost to the owners. This action has the effect of

Accepted Answer

A)  the lemon problem. 
B)  a manufacturer's warranty. 
C)  a market failure. 
D)  none of the above 
A)  the lemon problem. 
B)  a manufacturer's warranty. 
C)  a market failure. 
D)  none of the above

Question 20

The potential for a decline in product quality due to asymmetric information is commonly referred to as

Accepted Answer

A)  the lemons problem. 
B)  planned obsolescence. 
C)  diminishing marginal product. 
D)  the externality problem. 
A)  the lemons problem. 
B)  planned obsolescence. 
C)  diminishing marginal product. 
D)  the externality problem.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

Which antitrust act was passed to protect independent retailers from "unfair discrimination" by chain stores?

According to the capture hypothesis,

Financial markets are regulated by

Under rate-of-return regulation, average cost pricing

What are the major rationales for consumer protection in nonmonopolistic industries?

If a natural monopolist is unregulated, then

All of the following are exempt from antitrust enforcement EXCEPT

The U.S. antitrust enforcers will likely block a merger if

As a result of a conviction under the Sherman Antitrust Act, Standard Oil of New Jersey

The two basic types of government regulation are

Regulators often adopt policies that benefit

Suppose that a regulatory agency has imposed marginal cost pricing on a natural monopolist. We expect that

The problem of excess pollution mainly occurs because of

Which of the following is NOT an objective of economic regulation?

Social regulation is focused on all of the following EXCEPT

The first antitrust law in the United States was the

An unregulated natural monopolist would produce to the point at which

A firm that has taken advantage of economies of scale and expanded to become the only producer in the market is

An automobile manufacturer voluntarily recalls certain models to fix a defective part at no cost to the owners. This action has the effect of

The potential for a decline in product quality due to asymmetric information is commonly 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

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