Question 1

Which of the following federal agencies is engaged in economic regulation?

Accepted Answer

A) Occupational Safety and Health Administration 
B) Federal Motor Carrier Safety Administration 
C) Food and Drug Administration 
D) Consumer Product Safety Commission 
A) Occupational Safety and Health Administration 
B) Federal Motor Carrier Safety Administration 
C) Food and Drug Administration 
D) Consumer Product Safety Commission

Question 2

When the fox is guarding the henhouse,that is an example of 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 3

The Federal Trade Commission was established in 1914 to

Accepted Answer

A) regulate trade of public goods. 
B) promote competition in interstate commerce. 
C) investigate unfair competitive practices. 
D) prevent non-price competition. 
A) regulate trade of public goods. 
B) promote competition in interstate commerce. 
C) investigate unfair competitive practices. 
D) prevent non-price competition.

Question 4

The Federal Trade Commission regulates which of the following?

Accepted Answer

A) Unfair trade practices by businesses 
B) Financial markets 
C) Trade with third world countries 
D) The banking industry 
A) Unfair trade practices by businesses 
B) Financial markets 
C) Trade with third world countries 
D) The banking industry

Question 5

The total costs of regulation

Accepted Answer

A) include increased taxes and increased prices of the products being regulated. 
B) are paid entirely by the regulated industries. 
C) much higher than just the explicit government outlays to fund the administration of various regulations. 
D) are paid entirely by the consumers of regulated industries. 
A) include increased taxes and increased prices of the products being regulated. 
B) are paid entirely by the regulated industries. 
C) much higher than just the explicit government outlays to fund the administration of various regulations. 
D) are paid entirely by the consumers of regulated industries.

Question 6

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 7

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 8

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 9

One weakness of the Sherman Act is that

Accepted Answer

A) it fails to clearly define restraint of trade. 
B) it applies only to foreign monopolies. 
C) it applies only to the steel and railroad industries. 
D) none of the above 
A) it fails to clearly define restraint of trade. 
B) it applies only to foreign monopolies. 
C) it applies only to the steel and railroad industries. 
D) none of the above

Question 10

Which of the following is NOT exempt from antitrust laws?

Accepted Answer

A) Professional baseball 
B) Labor unions 
C) Airlines 
D) Public transit systems 
A) Professional baseball 
B) Labor unions 
C) Airlines 
D) Public transit systems

Question 11

The lemons problem occurs mainly because of

Accepted Answer

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

Question 12

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 13

The agency that deals with issues of "unfair and deceptive acts or practices in commerce" is the

Accepted Answer

A) Federal Trade Commission. 
B) Federal Products Commission. 
C) Federal Consumer Protection Agency. 
D) Federal Advertising Commission. 
A) Federal Trade Commission. 
B) Federal Products Commission. 
C) Federal Consumer Protection Agency. 
D) Federal Advertising Commission.

Question 14

One undesirable effect of social regulation is that it

Accepted Answer

A) affects smaller firms disproportionately,creating anticompetitive effects. 
B) destroys incentives for firms to engage in marginal cost pricing. 
C) raises prices of goods to consumers,while lowering prices to business and special interest groups. 
D) reduces the effectiveness of economic regulation. 
A) affects smaller firms disproportionately,creating anticompetitive effects. 
B) destroys incentives for firms to engage in marginal cost pricing. 
C) raises prices of goods to consumers,while lowering prices to business and special interest groups. 
D) reduces the effectiveness of economic regulation.

Question 15

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 16

The first antitrust law in the United States was the

Accepted Answer

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

Question 17

A natural monopoly exists when

Accepted Answer

A) control of a key input leads to a single-firm industry. 
B) increasing marginal returns and the ability to obtain quantity discounts from suppliers leads to a single-firm industry. 
C) economies of large-scale production are substantial,leading to a single-firm industry. 
D) the government restricts entry that leads to a single-firm industry. 
A) control of a key input leads to a single-firm industry. 
B) increasing marginal returns and the ability to obtain quantity discounts from suppliers leads to a single-firm industry. 
C) economies of large-scale production are substantial,leading to a single-firm industry. 
D) the government restricts entry that leads to a single-firm industry.

Question 18

The act of offering two or more products for sale as a set is called

Accepted Answer

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

Question 19

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 20

-In the above figure,if this natural monopolist were regulated and allowed to earn a "fair" rate of return,it would sell the product at the price ________.

Accepted Answer

A) A 
B) C 
C) B 
D) F 
A) A 
B) C 
C) B 
D) F

Exam 14: Regulation and Antitrust Policy in a Globalized Economy

Which of the following federal agencies is engaged in economic regulation?

When the fox is guarding the henhouse,that is an example of the

The Federal Trade Commission was established in 1914 to

The Federal Trade Commission regulates which of the following?

The total costs of regulation

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

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

When promoting average cost pricing,regulators

One weakness of the Sherman Act is that

Which of the following is NOT exempt from antitrust laws?

The lemons problem occurs mainly because of

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 agency that deals with issues of "unfair and deceptive acts or practices in commerce" is the

One undesirable effect of social regulation is that it

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

The first antitrust law in the United States was the

A natural monopoly exists when

The act of offering two or more products for sale as a set is called

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

-In the above figure,if this natural monopolist were regulated and allowed to earn a "fair" rate of return,it would sell the product at the price ________.

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

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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