Question 1

The so-called rule of reason in interpreting antitrust legislation suggests that the application of antitrust laws should be based on industry

Accepted Answer

A)  efficiency. 
B)  concentration ratios. 
C)  behavior. 
D)  structure. 
A)  efficiency. 
B)  concentration ratios. 
C)  behavior. 
D)  structure.

Question 2

Those who may file antitrust lawsuits against violators of the Sherman Act include the following, except

Accepted Answer

A)  injured private parties. 
B)  state attorneys general. 
C)  the U.S. Department of Labor. 
D)  the U.S. Department of Justice. 
A)  injured private parties. 
B)  state attorneys general. 
C)  the U.S. Department of Labor. 
D)  the U.S. Department of Justice.

Question 3

A caption that could serve as a retort to opponents of social regulation would be

Accepted Answer

A)  "There is no free lunch." 
B)  "You can't push on a string." 
C)  "Less government is not always better." 
D)  "Restraints of trade must be outlawed." 
A)  "There is no free lunch." 
B)  "You can't push on a string." 
C)  "Less government is not always better." 
D)  "Restraints of trade must be outlawed."

Question 4

Which one of the following is concerned with social regulation?

Accepted Answer

A)  Equal Employment Opportunity Commission 
B)  Federal Communications Commission 
C)  Sherman Commission 
D)  Federal Energy Regulatory Commission 
A)  Equal Employment Opportunity Commission 
B)  Federal Communications Commission 
C)  Sherman Commission 
D)  Federal Energy Regulatory Commission

Question 5

A function of the Federal Trade Commission is to

Accepted Answer

A)  investigate instances of faulty and misleading advertising. 
B)  establish railway rates for interstate railroads. 
C)  ban or recall unsafe consumer products. 
D)  prevent insider trading in securities markets. 
A)  investigate instances of faulty and misleading advertising. 
B)  establish railway rates for interstate railroads. 
C)  ban or recall unsafe consumer products. 
D)  prevent insider trading in securities markets.

Question 6

The situation where a single firm can supply the product to an entire market at a lower unit cost than if the market were split among a number of competing firms, is called a

Accepted Answer

A)  dominant firm oligopoly. 
B)  structured market. 
C)  natural monopoly. 
D)  trust. 
A)  dominant firm oligopoly. 
B)  structured market. 
C)  natural monopoly. 
D)  trust.

Question 7

The Clayton Act of 1914

Accepted Answer

A)  outlawed price discrimination, tying contracts, acquisition of stocks of competing corporations, and interlocking directorates that lessen competition. 
B)  prohibited unfair or deceptive acts or practices in commerce that tend to reduce competition. 
C)  outlawed vertical and conglomerate mergers. 
D)  prohibited one firm from acquiring the assets of another when the effect was to limit competition. 
A)  outlawed price discrimination, tying contracts, acquisition of stocks of competing corporations, and interlocking directorates that lessen competition. 
B)  prohibited unfair or deceptive acts or practices in commerce that tend to reduce competition. 
C)  outlawed vertical and conglomerate mergers. 
D)  prohibited one firm from acquiring the assets of another when the effect was to limit competition.

Question 8

The basic purpose of antitrust laws is to

Accepted Answer

A)  provide subsidies for American business. 
B)  limit monopoly power in industry. 
C)  control prices to protect consumers. 
D)  enforcelaws that restrict competition. 
A)  provide subsidies for American business. 
B)  limit monopoly power in industry. 
C)  control prices to protect consumers. 
D)  enforcelaws that restrict competition.

Question 9

Which one of the following is most likely to increase the Herfindahl index of a particular industry?

Accepted Answer

A)  a conglomerate merger 
B)  a vertical merger 
C)  a price-fixing arrangement among all the industry firms 
D)  a horizontal merger 
A)  a conglomerate merger 
B)  a vertical merger 
C)  a price-fixing arrangement among all the industry firms 
D)  a horizontal merger

Question 10

The public interest theory of regulation stipulates that government regulation of a natural monopoly is necessary in order to achieve all of the following, except

Accepted Answer

A)  preventing the natural monopoly from harming society through its monopoly pricing. 
B)  garnering for society at least part of the cost reductions from being a natural monopoly. 
C)  avoiding the reduction in output associated with monopoly power. 
D)  eventually breaking up the monopoly to achieve competition within the industry. 
A)  preventing the natural monopoly from harming society through its monopoly pricing. 
B)  garnering for society at least part of the cost reductions from being a natural monopoly. 
C)  avoiding the reduction in output associated with monopoly power. 
D)  eventually breaking up the monopoly to achieve competition within the industry.

Question 11

(Consider This) According to the Consider This box on catfish and art, which of the following firms were convicted for horizontal price-fixing?

Accepted Answer

A)  Dell and Gateway (personal computer makers) 
B)  Boeing and Airbus (aircraft manufacturers) 
C)  Heinz and Del Monte (food product firms) 
D)  Apple, Harper Collins, and Penguin (e-books) 
A)  Dell and Gateway (personal computer makers) 
B)  Boeing and Airbus (aircraft manufacturers) 
C)  Heinz and Del Monte (food product firms) 
D)  Apple, Harper Collins, and Penguin (e-books)

Question 12

Anticompetitive price discrimination, interlocking directorates, and tying contracts were banned by the

Accepted Answer

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

Question 13

If a buyer who wants product A is required by the seller to buy its products B and C as well, this is called

Accepted Answer

A)  an exclusive contract. 
B)  profit maximization. 
C)  competitive pricing. 
D)  a tying contract. 
A)  an exclusive contract. 
B)  profit maximization. 
C)  competitive pricing. 
D)  a tying contract.

Question 14

Which of the following beliefs is not strongly espoused by the "active antitrust perspective" in policy enforcement?

Accepted Answer

A)  Firms occasionally use illegal tactics to gain over competitors. 
B)  Antitrust authorities must act like officials in a football game. 
C)  Competition and creative destruction could lead to monopolies. 
D)  When competition is insufficient, allocative inefficiencies will occur. 
A)  Firms occasionally use illegal tactics to gain over competitors. 
B)  Antitrust authorities must act like officials in a football game. 
C)  Competition and creative destruction could lead to monopolies. 
D)  When competition is insufficient, allocative inefficiencies will occur.

Question 15

Tying contracts, which is prohibited under the Clayton Act, refers to the situation where a producer requires that a buyer

Accepted Answer

A)  can resell the product but only at a higher price than the original purchase price. 
B)  cannot buy a similar product from other producers if that buyer wants to continue buying its product. 
C)  buy another of its products as a condition for buying the desired product. 
D)  cannot ever resell the product bought. 
A)  can resell the product but only at a higher price than the original purchase price. 
B)  cannot buy a similar product from other producers if that buyer wants to continue buying its product. 
C)  buy another of its products as a condition for buying the desired product. 
D)  cannot ever resell the product bought.

Question 16

What is a major characteristic of a natural monopoly?

Accepted Answer

A)  The firm is a single seller of a resource. 
B)  It sets price equal to marginal revenue. 
C)  There is extensive product advertising. 
D)  There is a large range for economies of scale. 
A)  The firm is a single seller of a resource. 
B)  It sets price equal to marginal revenue. 
C)  There is extensive product advertising. 
D)  There is a large range for economies of scale.

Question 17

Supporters of social regulation contend that it has provided net benefits to society in the form of greater safety, a better environment, and less discrimination.

Accepted Answer

A) True 
 B)False

Question 18

In which of the following sets of antitrust cases did the government gain convictions?

Accepted Answer

A)  the U.S. Steel case and the Microsoft case 
B)  the Alcoa case and the Microsoft case 
C)  the DuPont cellophane case and the AT&T case 
D)  the U.S. Steel case and the Alcoa case 
A)  the U.S. Steel case and the Microsoft case 
B)  the Alcoa case and the Microsoft case 
C)  the DuPont cellophane case and the AT&T case 
D)  the U.S. Steel case and the Alcoa case

Question 19

"Behavioralists" in antitrust applications believe that a firm that dominates a market is not necessarily behaving unfairly.

Accepted Answer

A) True 
 B)False

Question 20

Differences in the interpretation and the enforcement of antitrust laws are in part rooted on the issue of focus. One such issue pertains to the question of whether the policy focus should be on

Accepted Answer

A)  domestic firms versus multinationals. 
B)  intrastate trade versus interstate trade. 
C)  monopoly output versus monopoly pricing 
D)  monopoly behavior versus monopoly structure. 
A)  domestic firms versus multinationals. 
B)  intrastate trade versus interstate trade. 
C)  monopoly output versus monopoly pricing 
D)  monopoly behavior versus monopoly structure.

Exam 21: Antitrust Policy and Regulation

The so-called rule of reason in interpreting antitrust legislation suggests that the application of antitrust laws should be based on industry

Those who may file antitrust lawsuits against violators of the Sherman Act include the following, except

A caption that could serve as a retort to opponents of social regulation would be

Which one of the following is concerned with social regulation?

A function of the Federal Trade Commission is to

The situation where a single firm can supply the product to an entire market at a lower unit cost than if the market were split among a number of competing firms, is called a

The Clayton Act of 1914

The basic purpose of antitrust laws is to

Which one of the following is most likely to increase the Herfindahl index of a particular industry?

The public interest theory of regulation stipulates that government regulation of a natural monopoly is necessary in order to achieve all of the following, except

(Consider This) According to the Consider This box on catfish and art, which of the following firms were convicted for horizontal price-fixing?

Anticompetitive price discrimination, interlocking directorates, and tying contracts were banned by the

If a buyer who wants product A is required by the seller to buy its products B and C as well, this is called

Which of the following beliefs is not strongly espoused by the "active antitrust perspective" in policy enforcement?

Tying contracts, which is prohibited under the Clayton Act, refers to the situation where a producer requires that a buyer

What is a major characteristic of a natural monopoly?

Supporters of social regulation contend that it has provided net benefits to society in the form of greater safety, a better environment, and less discrimination.

In which of the following sets of antitrust cases did the government gain convictions?

"Behavioralists" in antitrust applications believe that a firm that dominates a market is not necessarily behaving unfairly.

Differences in the interpretation and the enforcement of antitrust laws are in part rooted on the issue of focus. One such issue pertains to the question of whether the policy focus should be on

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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