Question 1

The merger of a firm in one industry with another firm in the same industry that sells similar products is called a

Accepted Answer

A)  vertical merger. 
B)  secondary merger. 
C)  horizontal merger. 
D)  conglomerate merger. 
A)  vertical merger. 
B)  secondary merger. 
C)  horizontal merger. 
D)  conglomerate merger.

Question 2

(Last Word) In 2000, Microsoft was fined $2.7 billion for

Accepted Answer

A)  using anticompetitive means to promote its Internet Explorer web browser. 
B)  monopolizing the market for word processing software. 
C)  conspiring with Netscape and Sun to monopolize the market for Internet browsers. 
D)  deliberately pricing Windows 95 and 98 below marginal cost to monopolize the market for operating systems for personal computers. 
A)  using anticompetitive means to promote its Internet Explorer web browser. 
B)  monopolizing the market for word processing software. 
C)  conspiring with Netscape and Sun to monopolize the market for Internet browsers. 
D)  deliberately pricing Windows 95 and 98 below marginal cost to monopolize the market for operating systems for personal computers.

Question 3

Which legislative act provided for the industrial regulation of the railroad industry by the Federal government?

Accepted Answer

A)  Interstate Commerce Act 
B)  Railway Labor Act 
C)  Sherman Act 
D)  Clayton Act 
A)  Interstate Commerce Act 
B)  Railway Labor Act 
C)  Sherman Act 
D)  Clayton Act

Question 4

The cornerstone of antitrust policy in the United States is generally considered to be the Sherman Antitrust Act of 1890.

Accepted Answer

A) True 
 B)False

Question 5

The largest efficiency gains from deregulation have occurred in the

Accepted Answer

A)  natural gas and cable television industries. 
B)  cable television and railroad industries. 
C)  communications and stock-brokering industries. 
D)  airlines, trucking, and railroad industries. 
A)  natural gas and cable television industries. 
B)  cable television and railroad industries. 
C)  communications and stock-brokering industries. 
D)  airlines, trucking, and railroad industries.

Question 6

Which of the following is a primary concern of social regulation?

Accepted Answer

A)  price-fixing 
B)  per se violation 
C)  product design 
D)  industry concentration 
A)  price-fixing 
B)  per se violation 
C)  product design 
D)  industry concentration

Question 7

A conglomerate merger

Accepted Answer

A)  can extend the line of products sold, extend the territories in which products are sold, or combine totally unrelated products. 
B)  is defined as a merger involving two firms that previously had a buyer-seller relationship. 
C)  is defined as a merger involving two firms producing the same or similar products and selling them in the same geographical market. 
D)  is illegal, per se. 
A)  can extend the line of products sold, extend the territories in which products are sold, or combine totally unrelated products. 
B)  is defined as a merger involving two firms that previously had a buyer-seller relationship. 
C)  is defined as a merger involving two firms producing the same or similar products and selling them in the same geographical market. 
D)  is illegal, per se.

Question 8

The administrative agency charged with enforcing the provisions of the Clayton Act (1914) was established by additional legislation in the same year. This legislation was the

Accepted Answer

A)  Celler-Kefauver Act. 
B)  Wheeler-Lea Act. 
C)  Sherman Act. 
D)  Federal Trade Commission Act. 
A)  Celler-Kefauver Act. 
B)  Wheeler-Lea Act. 
C)  Sherman Act. 
D)  Federal Trade Commission Act.

Question 9

Monopolization is illegal under Section 1 of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 10

The view that the mere possession of monopoly power is a violation of the antitrust laws, as in the Alcoa case of 1945, suggests that the application of antitrust laws should be based on industry

Accepted Answer

A)  behavior. 
B)  size. 
C)  efficiency. 
D)  structure. 
A)  behavior. 
B)  size. 
C)  efficiency. 
D)  structure.

Question 11

What is most likely to happen as the output of a natural monopoly increases over the range of market demand?

Accepted Answer

A)  There is a small decrease in average total cost and then it increases as output increases. 
B)  There is an increase in average total cost and then it decreases as output increases. 
C)  Average total cost increases as output increases. 
D)  Average total cost decreases as output increases. 
A)  There is a small decrease in average total cost and then it increases as output increases. 
B)  There is an increase in average total cost and then it decreases as output increases. 
C)  Average total cost increases as output increases. 
D)  Average total cost decreases as output increases.

Question 12

Which of the following does not necessarily violate antitrust laws?

Accepted Answer

A)  deceptive advertising 
B)  price discrimination 
C)  price-fixing 
D)  interlocking directorates 
A)  deceptive advertising 
B)  price discrimination 
C)  price-fixing 
D)  interlocking directorates

Question 13

The Celler-Kefauver Act of 1950

Accepted Answer

A)  modified patent legislation by reducing the number of years over which a patent is applicable. 
B)  prohibited any firm from acquiring the real assets of another firm where the effect was to lessen competition. 
C)  declared all conglomerate mergers to be illegal. 
D)  prohibited any firm from buying the stock of another firm where the effect was to lessen competition. 
A)  modified patent legislation by reducing the number of years over which a patent is applicable. 
B)  prohibited any firm from acquiring the real assets of another firm where the effect was to lessen competition. 
C)  declared all conglomerate mergers to be illegal. 
D)  prohibited any firm from buying the stock of another firm where the effect was to lessen competition.

Question 14

A caption that could serve as a warning to proponents of social regulation is

Accepted Answer

A)  "There is no free lunch." 
B)  "The rule of reason will prevail." 
C)  "The public interest will prevail." 
D)  "Protect the greatest number." 
A)  "There is no free lunch." 
B)  "The rule of reason will prevail." 
C)  "The public interest will prevail." 
D)  "Protect the greatest number."

Question 15

Which one of the following is concerned with industrial regulation, as distinct from social regulation?

Accepted Answer

A)  Occupational Safety and Health Administration 
B)  Consumer Products Safety Commission 
C)  Federal Communications Commission 
D)  Environmental Protection Agency 
A)  Occupational Safety and Health Administration 
B)  Consumer Products Safety Commission 
C)  Federal Communications Commission 
D)  Environmental Protection Agency

Question 16

Unfair advertising practices are investigated by the Federal Trade Commission.

Accepted Answer

A) True 
 B)False

Question 17

The Celler-Kefauver Act outlawed interlocking directorates.

Accepted Answer

A) True 
 B)False

Exam 21: Antitrust Policy and Regulation

The merger of a firm in one industry with another firm in the same industry that sells similar products is called a

(Last Word) In 2000, Microsoft was fined $2.7 billion for

Which legislative act provided for the industrial regulation of the railroad industry by the Federal government?

The cornerstone of antitrust policy in the United States is generally considered to be the Sherman Antitrust Act of 1890.

The largest efficiency gains from deregulation have occurred in the

Which of the following is a primary concern of social regulation?

A conglomerate merger

The administrative agency charged with enforcing the provisions of the Clayton Act (1914) was established by additional legislation in the same year. This legislation was the

Monopolization is illegal under Section 1 of the Sherman Act.

The view that the mere possession of monopoly power is a violation of the antitrust laws, as in the Alcoa case of 1945, suggests that the application of antitrust laws should be based on industry

What is most likely to happen as the output of a natural monopoly increases over the range of market demand?

Which of the following does not necessarily violate antitrust laws?

The Celler-Kefauver Act of 1950

A caption that could serve as a warning to proponents of social regulation is

Which one of the following is concerned with industrial regulation, as distinct from social regulation?

Unfair advertising practices are investigated by the Federal Trade Commission.

The Celler-Kefauver Act outlawed interlocking directorates.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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