Question 1

Which antitrust act provided that injured parties could file suit and, if successful, collect triple damages from monopolistic violators?

Accepted Answer

A)  Wheeler-Lea Act 
B)  Clayton Act 
C)  Sherman Act 
D)  Celler-Kefauver Act 
A)  Wheeler-Lea Act 
B)  Clayton Act 
C)  Sherman Act 
D)  Celler-Kefauver Act

Question 2

Which of the following results will not occur in a monopolistic market?

Accepted Answer

A)  The monopolist will maximize profits by setting a price that's higher than marginal cost. 
B)  The price will be higher than what would prevail in a competitive market. 
C)  In monopoly pricing, income is, in effect, transferred from consumers to the monopolist. 
D)  The output level will be higher than in a competitive market. 
A)  The monopolist will maximize profits by setting a price that's higher than marginal cost. 
B)  The price will be higher than what would prevail in a competitive market. 
C)  In monopoly pricing, income is, in effect, transferred from consumers to the monopolist. 
D)  The output level will be higher than in a competitive market.

Question 3

Tying contracts are illegal under the

Accepted Answer

A)  Wagner Act of 1935. 
B)  Clayton Act of 1914. 
C)  FTC Act of 1914. 
D)  Celler-Kefauver Act of 1950. 
A)  Wagner Act of 1935. 
B)  Clayton Act of 1914. 
C)  FTC Act of 1914. 
D)  Celler-Kefauver Act of 1950.

Question 4

In the Alcoa case of 1945, the courts held that

Accepted Answer

A)  the mere possession of monopoly power is a violation of the antitrust laws. 
B)  only contracts and combinations that unreasonably restrain trade are in violation of the Sherman Act. 
C)  retail and wholesale firms are exempt from antitrust legislation. 
D)  firms that sell more than one-half of their output overseas are exempt from antitrust. 
A)  the mere possession of monopoly power is a violation of the antitrust laws. 
B)  only contracts and combinations that unreasonably restrain trade are in violation of the Sherman Act. 
C)  retail and wholesale firms are exempt from antitrust legislation. 
D)  firms that sell more than one-half of their output overseas are exempt from antitrust.

Question 5

In the 2000 decision on the Microsoft antitrust case, the eventual remedy involved a

Accepted Answer

A)  change in the business practices of Microsoft. 
B)  merging of Microsoft with another company. 
C)  breakup of Microsoft into smaller firms. 
D)  takeover of Microsoft by the government. 
A)  change in the business practices of Microsoft. 
B)  merging of Microsoft with another company. 
C)  breakup of Microsoft into smaller firms. 
D)  takeover of Microsoft by the government.

Question 6

The legislation that prohibited acquisition of stock of another company if this would significantly lessen competition is the

Accepted Answer

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

Question 7

Structuralists take the position that

Accepted Answer

A)  the rule of reason is appropriate and desirable in interpreting the Sherman Act. 
B)  only unreasonable anticompetitive acts should be regarded as violations of the antitrust laws. 
C)  industries should be judged on the basis of their technological progress and their price-output behavior. 
D)  an industry that is highly concentrated will behave monopolistically. 
A)  the rule of reason is appropriate and desirable in interpreting the Sherman Act. 
B)  only unreasonable anticompetitive acts should be regarded as violations of the antitrust laws. 
C)  industries should be judged on the basis of their technological progress and their price-output behavior. 
D)  an industry that is highly concentrated will behave monopolistically.

Question 8

Which of the following is most likely to be a natural monopoly?

Accepted Answer

A)  aircraft manufacturing 
B)  auto manufacturing 
C)  electric utilities 
D)  steel production 
A)  aircraft manufacturing 
B)  auto manufacturing 
C)  electric utilities 
D)  steel production

Question 9

A major shortcoming of the Sherman Act was that

Accepted Answer

A)  it was too specific. 
B)  it was never enforced by the courts. 
C)  violators of the act were forced out of business. 
D)  it did not explicitly state which activities were illegal. 
A)  it was too specific. 
B)  it was never enforced by the courts. 
C)  violators of the act were forced out of business. 
D)  it did not explicitly state which activities were illegal.

Question 10

Conglomerate mergers are combinations of

Accepted Answer

A)  many small firms. 
B)  firms producing the same product. 
C)  firms producing unrelated products. 
D)  firms operating at different stages in a given production process. 
A)  many small firms. 
B)  firms producing the same product. 
C)  firms producing unrelated products. 
D)  firms operating at different stages in a given production process.

Question 11

The Celler-Kefauver Act of 1950

Accepted Answer

A)  outlawed price-fixing. 
B)  amended the Sherman Act. 
C)  amended the Clayton Act. 
D)  created the Civil Aeronautics Board (CA
B) . 
A)  outlawed price-fixing. 
B)  amended the Sherman Act. 
C)  amended the Clayton Act. 
D)  created the Civil Aeronautics Board (CA
B) .

Question 12

A major criticism of industrial regulation is that

Accepted Answer

A)  it has been applied to virtually all major U.S. corporations in the post-Second World War period. 
B)  marginal cost pricing has created an underallocation of resources. 
C)  by allowing a fair return price, it gives natural monopolists little incentive to contain costs. 
D)  regulatory commissions have frequently caused natural monopolies to go bankrupt. 
A)  it has been applied to virtually all major U.S. corporations in the post-Second World War period. 
B)  marginal cost pricing has created an underallocation of resources. 
C)  by allowing a fair return price, it gives natural monopolists little incentive to contain costs. 
D)  regulatory commissions have frequently caused natural monopolies to go bankrupt.

Question 13

Which one of the following acts declared "every contract, combination . . . or conspiracy, in restraint of trade or commerce among the several states . . . to be illegal"?

Accepted Answer

A)  the Wheeler-Lea Act 
B)  the Federal Trade Commission Act 
C)  the Sherman Act 
D)  the Interstate Commerce Act 
A)  the Wheeler-Lea Act 
B)  the Federal Trade Commission Act 
C)  the Sherman Act 
D)  the Interstate Commerce Act

Question 14

Economists who adhere to the laissez-faire antitrust perspective

Accepted Answer

A)  view competition as a long-run dynamic process in which firms battle for dominance of markets but rarely can sustain such dominance once it is achieved. 
B)  believe the antitrust laws are as important today as they were when they were passed in the early 1900s. 
C)  say that an industry's structure, which is based on economies of scale, usually predicts the behavior of the industry firms. 
D)  contend that large, dominant firms should be broken into smaller competitive firms and then government should stand back and let competition prevail. 
A)  view competition as a long-run dynamic process in which firms battle for dominance of markets but rarely can sustain such dominance once it is achieved. 
B)  believe the antitrust laws are as important today as they were when they were passed in the early 1900s. 
C)  say that an industry's structure, which is based on economies of scale, usually predicts the behavior of the industry firms. 
D)  contend that large, dominant firms should be broken into smaller competitive firms and then government should stand back and let competition prevail.

Question 15

Most economists conclude that deregulation has reduced prices and led to more competition in deregulated industries.

Accepted Answer

A) True 
 B)False

Question 16

In antitrust law, "price-fixing" refers to

Accepted Answer

A)  the government fixing the prices of products of antitrust violators. 
B)  a company fixing the price of its own product regardless of the degree of competition. 
C)  competitors colluding to set their prices collectively. 
D)  a company paying its suppliers a fixed price for certain inputs. 
A)  the government fixing the prices of products of antitrust violators. 
B)  a company fixing the price of its own product regardless of the degree of competition. 
C)  competitors colluding to set their prices collectively. 
D)  a company paying its suppliers a fixed price for certain inputs.

Question 17

In the Microsoft antitrust case, the federal government said in essence that

Accepted Answer

A)  the mere presence of monopoly violated the Sherman Act, irrespective of Microsoft's behavior. 
B)  Microsoft was a "bad monopoly." 
C)  Microsoft was generally a "good monopoly" but that its tying contracts involving Internet Explorer violated the Clayton Act. 
D)  the case was similar to the U.S. Steel case of 1920. 
A)  the mere presence of monopoly violated the Sherman Act, irrespective of Microsoft's behavior. 
B)  Microsoft was a "bad monopoly." 
C)  Microsoft was generally a "good monopoly" but that its tying contracts involving Internet Explorer violated the Clayton Act. 
D)  the case was similar to the U.S. Steel case of 1920.

Question 18

(Last Word) What problem is created for antitrust regulators by online pricing algorithms?

Accepted Answer

A)  Even if the algorithms produce collusive prices, the lack of an agreement makes it difficult to prosecute under current antitrust law. 
B)  The encrypted data does not allow regulators to determine whether prices are converging to a level consistent with collusion. 
C)  Online pricing algorithms are programmed to randomly vary prices to prevent antitrust regulators from discovering price-fixing. 
D)  Online pricing algorithms are programmed to ensure that there is just enough of a gap between prices across firms that collusion would be impossible to prove. 
A)  Even if the algorithms produce collusive prices, the lack of an agreement makes it difficult to prosecute under current antitrust law. 
B)  The encrypted data does not allow regulators to determine whether prices are converging to a level consistent with collusion. 
C)  Online pricing algorithms are programmed to randomly vary prices to prevent antitrust regulators from discovering price-fixing. 
D)  Online pricing algorithms are programmed to ensure that there is just enough of a gap between prices across firms that collusion would be impossible to prove.

Question 19

If there was a conspiracy to fix prices, but the conspiracy did not succeed, the government can still take the conspiring firm to court for improper conduct. This situation would be an example of

Accepted Answer

A)  the rule of reason. 
B)  a cease-and-desist order. 
C)  a per se violation. 
D)  tying contracts. 
A)  the rule of reason. 
B)  a cease-and-desist order. 
C)  a per se violation. 
D)  tying contracts.

Question 20

Most economists agree that, overall, U.S. antitrust policy has been most successful in

Accepted Answer

A)  promoting competition and efficiency. 
B)  remedying existing anticompetitive behavior. 
C)  deterring price-fixing and anticompetitive mergers. 
D)  breaking up monopolies. 
A)  promoting competition and efficiency. 
B)  remedying existing anticompetitive behavior. 
C)  deterring price-fixing and anticompetitive mergers. 
D)  breaking up monopolies.

Exam 21: Antitrust Policy and Regulation

Which antitrust act provided that injured parties could file suit and, if successful, collect triple damages from monopolistic violators?

Which of the following results will not occur in a monopolistic market?

Tying contracts are illegal under the

In the Alcoa case of 1945, the courts held that

In the 2000 decision on the Microsoft antitrust case, the eventual remedy involved a

The legislation that prohibited acquisition of stock of another company if this would significantly lessen competition is the

Structuralists take the position that

Which of the following is most likely to be a natural monopoly?

A major shortcoming of the Sherman Act was that

Conglomerate mergers are combinations of

The Celler-Kefauver Act of 1950

A major criticism of industrial regulation is that

Which one of the following acts declared "every contract, combination . . . or conspiracy, in restraint of trade or commerce among the several states . . . to be illegal"?

Economists who adhere to the laissez-faire antitrust perspective

Most economists conclude that deregulation has reduced prices and led to more competition in deregulated industries.

In antitrust law, "price-fixing" refers to

In the Microsoft antitrust case, the federal government said in essence that

(Last Word) What problem is created for antitrust regulators by online pricing algorithms?

If there was a conspiracy to fix prices, but the conspiracy did not succeed, the government can still take the conspiring firm to court for improper conduct. This situation would be an example of

Most economists agree that, overall, U.S. antitrust policy has been most successful in

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

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Behavioral Economics

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Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

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Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

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