Question 1

Under the U.S.system of regulation,most regulars are selected from

Accepted Answer

A) politicians and their friends. 
B) the industry that is to be regulated. 
C) consumer advocacy groups. 
D) university professors who understand the nature of the industry and who understand the true interests of consumers. 
A) politicians and their friends. 
B) the industry that is to be regulated. 
C) consumer advocacy groups. 
D) university professors who understand the nature of the industry and who understand the true interests of consumers.

Question 2

-Use the above figure.Suppose that a regulatory agency requires this natural monopolist to engage in marginal cost pricing.This would lead to

Accepted Answer

A) losses,which would drive the monopolist out of business in the long run. 
B) profits,which would encourage new producers to enter the industry in the long run. 
C) profits,but new firms cannot enter the industry in the long run due to high barriers to entry. 
D) losses,which would encourage the monopolist to lower costs in the long run. 
A) losses,which would drive the monopolist out of business in the long run. 
B) profits,which would encourage new producers to enter the industry in the long run. 
C) profits,but new firms cannot enter the industry in the long run due to high barriers to entry. 
D) losses,which would encourage the monopolist to lower costs in the long run.

Question 3

Asymmetric information is

Accepted Answer

A) when a market failure occurs. 
B) an externality. 
C) when the producer has information on the product that the consumer lacks. 
D) the regulatory price for a natural monopoly. 
A) when a market failure occurs. 
B) an externality. 
C) when the producer has information on the product that the consumer lacks. 
D) the regulatory price for a natural monopoly.

Question 4

The cost of complying with regulation

Accepted Answer

A) shifts the ATC curve upward. 
B) shifts the MC curve downward. 
C) shifts the demand curve to the right. 
D) increases the products' price elasticity of demand. 
A) shifts the ATC curve upward. 
B) shifts the MC curve downward. 
C) shifts the demand curve to the right. 
D) increases the products' price elasticity of demand.

Question 5

A creative response to regulations can be described as

Accepted Answer

A) conforming to the letter of the law but undermining its spirit. 
B) totally conforming to the law. 
C) completely ignoring the law. 
D) none of the above. 
A) conforming to the letter of the law but undermining its spirit. 
B) totally conforming to the law. 
C) completely ignoring the law. 
D) none of the above.

Question 6

Clarke's gas station in Podunk only sells gasoline if customers also purchase oil.

Accepted Answer

A) This is called a tie-in sale and is in violation of antitrust laws. 
B) This is not in violation of antitrust laws,as cars need both oil and gas. 
C) This is not in violation of antitrust laws,as consumers get the oil below market prices. 
D) This is in violation of the Robinson-Patman Act. 
A) This is called a tie-in sale and is in violation of antitrust laws. 
B) This is not in violation of antitrust laws,as cars need both oil and gas. 
C) This is not in violation of antitrust laws,as consumers get the oil below market prices. 
D) This is in violation of the Robinson-Patman Act.

Question 7

Regulation focused on the impact of production on the environment and society,the working conditions under which production occurs,or the physical attributes of goods,is known as

Accepted Answer

A) cost-of-service regulation. 
B) rate-of-return regulation. 
C) social regulation. 
D) monopoly regulation. 
A) cost-of-service regulation. 
B) rate-of-return regulation. 
C) social regulation. 
D) monopoly regulation.

Question 8

A potential benefit that comes from social regulations would be

Accepted Answer

A) higher costs. 
B) a cleaner environment. 
C) higher tax collections. 
D) more layoffs. 
A) higher costs. 
B) a cleaner environment. 
C) higher tax collections. 
D) more layoffs.

Question 9

All of the following are possible criticisms of social regulation EXCEPT

Accepted Answer

A) that the costs may outweigh the benefits. 
B) that social regulation may create anticompetitive effects. 
C) that the regulations have not resulted in safer working conditions. 
D) that the regulations lead to higher production costs. 
A) that the costs may outweigh the benefits. 
B) that social regulation may create anticompetitive effects. 
C) that the regulations have not resulted in safer working conditions. 
D) that the regulations lead to higher production costs.

Question 10

According to OSHA standards,the air in the building that John works in is unsafe.The type of regulation that OSHA engages in is known as

Accepted Answer

A) the Federal Register. 
B) social regulation. 
C) the market share test. 
D) economic regulation. 
A) the Federal Register. 
B) social regulation. 
C) the market share test. 
D) economic regulation.

Question 11

Which of the statements best describes the difference between economic regulation and social regulation?

Accepted Answer

A) There are no significant differences between economic and social regulation,social regulation is a more modern way of regulating an economy. 
B) Economic regulation focuses on output and price; social regulation focuses on improving the quality of life. 
C) Social regulation focuses on output and price; economic regulation focuses on quality of life issues. 
D) Social regulation targets industries like transportation,while economic regulation targets utilities. 
A) There are no significant differences between economic and social regulation,social regulation is a more modern way of regulating an economy. 
B) Economic regulation focuses on output and price; social regulation focuses on improving the quality of life. 
C) Social regulation focuses on output and price; economic regulation focuses on quality of life issues. 
D) Social regulation targets industries like transportation,while economic regulation targets utilities.

Question 12

Government policy that attempts to prevent collusion among the sellers of a product and attempts to prevent restraint of trade is known as

Accepted Answer

A) social policy. 
B) antitrust policy. 
C) inherent policy. 
D) goodwill policy. 
A) social policy. 
B) antitrust policy. 
C) inherent policy. 
D) goodwill policy.

Question 13

The theory of regulatory behavior that suggests that regulators must consider the demands of legislators,consumers,and members of the regulated agency is called

Accepted Answer

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

Question 14

Under rate-of-return regulation,average cost pricing

Accepted Answer

A) is inflated so the firm can make economic profits. 
B) includes variable costs but not a cost for capital. 
C) includes what they consider to be a fair rate of return on investment. 
D) includes a cost for capital that generates an above normal rate of return. 
A) is inflated so the firm can make economic profits. 
B) includes variable costs but not a cost for capital. 
C) includes what they consider to be a fair rate of return on investment. 
D) includes a cost for capital that generates an above normal rate of return.

Question 15

Discuss the important provisions of the Sherman Antitrust Act of 1890.

Accepted Answer

The Sherman Antitrust Act prohibits cont

Question 16

All of the following are exempt from antitrust laws EXCEPT

Accepted Answer

A) labor unions. 
B) professional baseball. 
C) oil companies. 
D) public utilities. 
A) labor unions. 
B) professional baseball. 
C) oil companies. 
D) public utilities.

Question 17

What is the difference between product versioning and product bundling? Which of these two business practices have antitrust authorities been more likely to regard to be the form of price discrimination called tie-in sales? Why?

Accepted Answer

Versioning entails selling a product in

Question 18

The "Chain Store Act" is a name given to the

Accepted Answer

A) Clayton Act. 
B) Federal Trade Commission Act. 
C) Robinson-Patman Act. 
D) Sherman Antitrust Act. 
A) Clayton Act. 
B) Federal Trade Commission Act. 
C) Robinson-Patman Act. 
D) Sherman Antitrust Act.

Question 19

The difference between cost-of-service regulation and rate-of-return regulation is that

Accepted Answer

A) the former sets prices based on actual costs,and the latter focuses on setting prices such that the firm earns a normal rate of return. 
B) the latter sets prices first,and then the firm must keep costs in line if it wants to earn a profit,and the former sets price high enough to cover costs. 
C) the former uses marginal cost pricing and the latter uses average cost pricing. 
D) the former uses average cost pricing and the latter uses marginal cost pricing. 
A) the former sets prices based on actual costs,and the latter focuses on setting prices such that the firm earns a normal rate of return. 
B) the latter sets prices first,and then the firm must keep costs in line if it wants to earn a profit,and the former sets price high enough to cover costs. 
C) the former uses marginal cost pricing and the latter uses average cost pricing. 
D) the former uses average cost pricing and the latter uses marginal cost pricing.

Question 20

What are the major rationales for consumer protection in nonmonopolistic industries?

Accepted Answer

The main rationales for consumer protect

Exam 14: Regulation and Antitrust Policy in a Globalized Economy

Under the U.S.system of regulation,most regulars are selected from

-Use the above figure.Suppose that a regulatory agency requires this natural monopolist to engage in marginal cost pricing.This would lead to

Asymmetric information is

The cost of complying with regulation

A creative response to regulations can be described as

Clarke's gas station in Podunk only sells gasoline if customers also purchase oil.

Regulation focused on the impact of production on the environment and society,the working conditions under which production occurs,or the physical attributes of goods,is known as

A potential benefit that comes from social regulations would be

All of the following are possible criticisms of social regulation EXCEPT

According to OSHA standards,the air in the building that John works in is unsafe.The type of regulation that OSHA engages in is known as

Which of the statements best describes the difference between economic regulation and social regulation?

Government policy that attempts to prevent collusion among the sellers of a product and attempts to prevent restraint of trade is known as

The theory of regulatory behavior that suggests that regulators must consider the demands of legislators,consumers,and members of the regulated agency is called

Under rate-of-return regulation,average cost pricing

Discuss the important provisions of the Sherman Antitrust Act of 1890.

All of the following are exempt from antitrust laws EXCEPT

What is the difference between product versioning and product bundling? Which of these two business practices have antitrust authorities been more likely to regard to be the form of price discrimination called tie-in sales? Why?

The "Chain Store Act" is a name given to the

The difference between cost-of-service regulation and rate-of-return regulation is that

What are the major rationales for consumer protection in nonmonopolistic industries?

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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