Question 1

A difference between economic regulation and social regulation is that

Accepted Answer

A)  the former tends to affect the prices at which products are sold and the latter does not. 
B)  the former tends to affect the profits of firms and the latter does not. 
C)  the former tends to be specific to an industry and the latter tends to affect firms in all industries. 
D)  the former tends to be done at the state level and the latter at the federal level. 
A)  the former tends to affect the prices at which products are sold and the latter does not. 
B)  the former tends to affect the profits of firms and the latter does not. 
C)  the former tends to be specific to an industry and the latter tends to affect firms in all industries. 
D)  the former tends to be done at the state level and the latter at the federal level.

Question 2

The Federal Register

Accepted Answer

A)  itemizes state and local government spending. 
B)  is used to track immigration. 
C)  publishes all the new federal regulatory rules. 
D)  has decreased in size. 
A)  itemizes state and local government spending. 
B)  is used to track immigration. 
C)  publishes all the new federal regulatory rules. 
D)  has decreased in size.

Question 3

Without any regulation, the natural monopolist will

Accepted Answer

A)  not produce any output. 
B)  produce to the point at which P = ATC. 
C)  produce less output than it would if the industry was purely competitive. 
D)  have an upward-shifting average cost curve. 
A)  not produce any output. 
B)  produce to the point at which P = ATC. 
C)  produce less output than it would if the industry was purely competitive. 
D)  have an upward-shifting average cost curve.

Question 4

-In the above figure, if the monopolist engages in marginal cost pricing, what are its output and price?

Accepted Answer

A)  1,200, $3 
B)  900, $7 
C)  700, $7 
D)  700, $10 
A)  1,200, $3 
B)  900, $7 
C)  700, $7 
D)  700, $10

Question 5

The Interstate Commerce Commission (ICC) regulates railroads, barges and trucks. Suppose technical change lowers the costs of railroads. As a result, the ICC permits railroads to lower prices some but also alters the rates of barges and trucks so they get additional business. The ICC would be acting consistently with

Accepted Answer

A)  the capture theory of regulation. 
B)  the public interest theory of regulation. 
C)  the share-the-gains, share-the-pains theory of regulation. 
D)  None of the theories presented in the text since economic regulation is specific to a single industry and not to agencies that cover more than one industry. That is the province of social regulation. 
A)  the capture theory of regulation. 
B)  the public interest theory of regulation. 
C)  the share-the-gains, share-the-pains theory of regulation. 
D)  None of the theories presented in the text since economic regulation is specific to a single industry and not to agencies that cover more than one industry. That is the province of social regulation.

Question 6

The regulatory agency most concerned with false advertising is the

Accepted Answer

A)  Antitrust Division of the Justice Department. 
B)  National Labor Relations Board. 
C)  Federal Deposit Insurance Corp. 
D)  Federal Trade Commission. 
A)  Antitrust Division of the Justice Department. 
B)  National Labor Relations Board. 
C)  Federal Deposit Insurance Corp. 
D)  Federal Trade Commission.

Question 7

When regulating a natural monopoly, average cost pricing is usually used rather than marginal cost pricing because

Accepted Answer

A)  average cost pricing allows the firm to earn a normal rate of return on investment, while marginal cost pricing leads to economic losses. 
B)  average cost pricing is more economically efficient than marginal cost pricing. 
C)  average cost pricing leads to lower profits than marginal cost pricing. 
D)  average cost pricing leads to a lower market price than marginal cost pricing. 
A)  average cost pricing allows the firm to earn a normal rate of return on investment, while marginal cost pricing leads to economic losses. 
B)  average cost pricing is more economically efficient than marginal cost pricing. 
C)  average cost pricing leads to lower profits than marginal cost pricing. 
D)  average cost pricing leads to a lower market price than marginal cost pricing.

Question 8

The act of selling an item in slightly altered forms at different prices and to different groups of consumers is known as

Accepted Answer

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

Question 9

When a regulator is concerned about pleasing different groups in order to keep employed, this is known as the

Accepted Answer

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

Question 10

One key purpose of economic regulation is

Accepted Answer

A)  to force a firm to produce at the point at which 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 at which 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 11

This agency is responsible for regulating the quality and safety of foods, health and medical products, pharmaceuticals, cosmetics, and animal feed.

Accepted Answer

A)  Environmental Protection Agency 
B)  Food and Drug Administration 
C)  Equal Employment Opportunity Commission 
D)  Federal Trade Commission 
A)  Environmental Protection Agency 
B)  Food and Drug Administration 
C)  Equal Employment Opportunity Commission 
D)  Federal Trade Commission

Question 12

Which of the following is NOT a likely market solution to the lemons problem?

Accepted Answer

A)  average cost pricing 
B)  product warranty 
C)  industry standard 
D)  product certification 
A)  average cost pricing 
B)  product warranty 
C)  industry standard 
D)  product certification

Question 13

Which of the following will NOT be true if the antitrust laws are successful?

Accepted Answer

A)  Producers will earn zero economic profits in the long-run. 
B)  Firms will not restrict output. 
C)  Firms will produce the competitive output. 
D)  Firms will produce the quantity at which marginal cost equals marginal revenue and charge a price that is greater than marginal cost. 
A)  Producers will earn zero economic profits in the long-run. 
B)  Firms will not restrict output. 
C)  Firms will produce the competitive output. 
D)  Firms will produce the quantity at which marginal cost equals marginal revenue and charge a price that is greater than marginal cost.

Question 14

The first antitrust law in the United States was the

Accepted Answer

A)  Clayton Act. 
B)  Contestable Markets Act. 
C)  the Federal Trade Commission Act. 
D)  Sherman Antitrust Act. 
A)  Clayton Act. 
B)  Contestable Markets Act. 
C)  the Federal Trade Commission Act. 
D)  Sherman Antitrust Act.

Question 15

The type of mergers that the Federal Trade Commission will most likely challenge are

Accepted Answer

A)  mergers of firms within a relevant market. 
B)  mergers of firms in different markets. 
C)  mergers of firms that will generate economies of scale. 
D)  mergers of firms in different geographical locations. 
A)  mergers of firms within a relevant market. 
B)  mergers of firms in different markets. 
C)  mergers of firms that will generate economies of scale. 
D)  mergers of firms in different geographical locations.

Question 16

Discuss the Clayton Act and the Federal Trade Commission Act, and relevant amendments to them.

Accepted Answer

The Clayton Act was passed to prohibit o

Question 17

The lemons problem is a situation of

Accepted Answer

A)  perfect competition. 
B)  asymmetric information. 
C)  creative response. 
D)  a natural monopoly. 
A)  perfect competition. 
B)  asymmetric information. 
C)  creative response. 
D)  a natural monopoly.

Question 18

When promoting average cost pricing, regulators

Accepted Answer

A)  include what they consider to be a normal rate of return on investment. 
B)  encourage firms to produce at the output level where price equals marginal cost. 
C)  fail to consider a return to investors, so regulated firms often have a hard time raising investment funds. 
D)  inflate costs so much that price ends up as large as would prevail under unregulated monopoly. 
A)  include what they consider to be a normal rate of return on investment. 
B)  encourage firms to produce at the output level where price equals marginal cost. 
C)  fail to consider a return to investors, so regulated firms often have a hard time raising investment funds. 
D)  inflate costs so much that price ends up as large as would prevail under unregulated monopoly.

Question 19

Which of the following are exempt from the antitrust laws?

Accepted Answer

A)  Colleges and universities 
B)  All professional athletes 
C)  Labor unions 
D)  Deregulated industries 
A)  Colleges and universities 
B)  All professional athletes 
C)  Labor unions 
D)  Deregulated industries

Question 20

Which of the following is the outcome of the lemons problem in the used-car market?

Accepted Answer

A)  Only low-quality cars will be traded in the market. 
B)  Only high-quality cars will be traded in the market. 
C)  Both low-quality and high-quality cars will be traded in the market. 
D)  No cars will be traded in the market. 
A)  Only low-quality cars will be traded in the market. 
B)  Only high-quality cars will be traded in the market. 
C)  Both low-quality and high-quality cars will be traded in the market. 
D)  No cars will be traded in the market.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

A difference between economic regulation and social regulation is that

The Federal Register

Without any regulation, the natural monopolist will

-In the above figure, if the monopolist engages in marginal cost pricing, what are its output and price?

The regulatory agency most concerned with false advertising is the

When regulating a natural monopoly, average cost pricing is usually used rather than marginal cost pricing because

The act of selling an item in slightly altered forms at different prices and to different groups of consumers is known as

When a regulator is concerned about pleasing different groups in order to keep employed, this is known as the

One key purpose of economic regulation is

This agency is responsible for regulating the quality and safety of foods, health and medical products, pharmaceuticals, cosmetics, and animal feed.

Which of the following is NOT a likely market solution to the lemons problem?

Which of the following will NOT be true if the antitrust laws are successful?

The first antitrust law in the United States was the

The type of mergers that the Federal Trade Commission will most likely challenge are

Discuss the Clayton Act and the Federal Trade Commission Act, and relevant amendments to them.

The lemons problem is a situation of

When promoting average cost pricing, regulators

Which of the following are exempt from the antitrust laws?

Which of the following is the outcome of the lemons problem in the used-car market?

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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