Question 1

Financial markets are regulated by

Accepted Answer

A) the Securities and Exchange Commission. 
B) the Stock and Bond Exchange Commission. 
C) the Security and Protection Commission. 
D) the Stock and Exchange Commission. 
A) the Securities and Exchange Commission. 
B) the Stock and Bond Exchange Commission. 
C) the Security and Protection Commission. 
D) the Stock and Exchange Commission.

Question 2

Which of the following acts outlawed selling products at "unreasonably low prices" with the intent of reducing competition?

Accepted Answer

A) Sherman Act 
B) FTC Act 
C) Robinson-Patman Act 
D) Wheeler-Lea Act 
A) Sherman Act 
B) FTC Act 
C) Robinson-Patman Act 
D) Wheeler-Lea Act

Question 3

Commonwealth Edison is the only provider of electricity to many households in the Chicago area.Commonwealth Edison is regulated by the government.This type of regulation 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 4

If a natural monopolist is unregulated,then

Accepted Answer

A) the monopoly will produce efficiently from society's point of view. 
B) the monopoly will produce inefficiently from society's point of view. 
C) the monopolist will be earning just a normal rate of return on investment. 
D) the monopolist will determine the profit maximizing quantity by equating marginal cost to the demand curve. 
A) the monopoly will produce efficiently from society's point of view. 
B) the monopoly will produce inefficiently from society's point of view. 
C) the monopolist will be earning just a normal rate of return on investment. 
D) the monopolist will determine the profit maximizing quantity by equating marginal cost to the demand curve.

Question 5

-In the above figure,what will be the output level produced if average cost pricing is used?

Accepted Answer

A) 1,200 
B) 900 
C) 700 
D) somewhere between 900 and 1,200 
A) 1,200 
B) 900 
C) 700 
D) somewhere between 900 and 1,200

Question 6

As a result of a conviction under the Sherman Antitrust Act,Standard Oil of New Jersey

Accepted Answer

A) was fined for its extensive price discriminating activity. 
B) was restrained from oil exploration for twenty-five years,which enabled other oil firms to assume leadership in the industry. 
C) was broken up into many smaller companies. 
D) went bankrupt and no longer is in existence. 
A) was fined for its extensive price discriminating activity. 
B) was restrained from oil exploration for twenty-five years,which enabled other oil firms to assume leadership in the industry. 
C) was broken up into many smaller companies. 
D) went bankrupt and no longer is in existence.

Question 7

-In the above figure,what would be the profit or loss at the profit-maximizing output for this natural monopolist?

Accepted Answer

A) -$300 
B) $2,700 
C) $2,100 
D) -$1,200 
A) -$300 
B) $2,700 
C) $2,100 
D) -$1,200

Question 8

One of the basic differences between social and economic regulations is that

Accepted Answer

A) economic regulations only apply to financial institutions while social regulations apply to a greater variety of institutions. 
B) social regulations only apply to non-profit organizations while economic regulations apply only to for-profit organizations. 
C) economic regulations cover only particular industries while social regulations apply to all firms in the economy. 
D) economic regulations focus on the banking industry while social regulations focus on monopolies. 
A) economic regulations only apply to financial institutions while social regulations apply to a greater variety of institutions. 
B) social regulations only apply to non-profit organizations while economic regulations apply only to for-profit organizations. 
C) economic regulations cover only particular industries while social regulations apply to all firms in the economy. 
D) economic regulations focus on the banking industry while social regulations focus on monopolies.

Question 9

The first major law created to control the growth of monopoly power was the

Accepted Answer

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

Question 10

This agency is responsible for investigating complaints of discrimination based on race,religion,sex or age in hiring,promotion,firing,wages,testing,and all other conditions of employment.

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 11

What is the problem with marginal cost pricing in the natural monopoly situation? How do regulatory agencies in the United States usually handle the problem?

Accepted Answer

If the firm is a natural monopoly,then l

Question 12

Cab drivers operating from JFK Airport to the City of New York legally must charge a specific fare.This is an example of

Accepted Answer

A) social regulation. 
B) economic regulation. 
C) the market share test. 
D) the rate of return test. 
A) social regulation. 
B) economic regulation. 
C) the market share test. 
D) the rate of return test.

Question 13

The "capture" in the capture hypothesis occurs because

Accepted Answer

A) regulators try to promote everyone's best interest. 
B) society doesn't care for regulatory agencies. 
C) regulators always know what is in society's best interest. 
D) regulators usually have been or will be associated with the industries they regulate. 
A) regulators try to promote everyone's best interest. 
B) society doesn't care for regulatory agencies. 
C) regulators always know what is in society's best interest. 
D) regulators usually have been or will be associated with the industries they regulate.

Question 14

Which of the following is illegal according to the antitrust laws?

Accepted Answer

A) the use of coupons 
B) price discrimination based on cost differences 
C) vertical mergers 
D) price fixing 
A) the use of coupons 
B) price discrimination based on cost differences 
C) vertical mergers 
D) price fixing

Question 15

While economic regulation applies to ________ industries,social regulation applies to ________ firms.

Accepted Answer

A) particular; individual 
B) particular; all 
C) all; individual 
D) utility; healthcare 
A) particular; individual 
B) particular; all 
C) all; individual 
D) utility; healthcare

Question 16

The act of Congress which prohibited "unfair or deceptive acts or practices in commerce" is called

Accepted Answer

A) the Federal Trade Commission Act of 1914. 
B) the Clayton Act. 
C) the Chain Store Act. 
D) the Robinson-Patman Act. 
A) the Federal Trade Commission Act of 1914. 
B) the Clayton Act. 
C) the Chain Store Act. 
D) the Robinson-Patman Act.

Question 17

Regulation of monopolies that allows prices to reflect only the actual cost of production and no monopoly profits is referred to as

Accepted Answer

A) cost-of-service regulation. 
B) rate-of-return regulation. 
C) service-opportunity regulation. 
D) natural regulation. 
A) cost-of-service regulation. 
B) rate-of-return regulation. 
C) service-opportunity regulation. 
D) natural regulation.

Question 18

According to the text,critics point out that the costs incurred by firms due to regulations

Accepted Answer

A) increase production costs. 
B) lower production costs to the shutdown point. 
C) reduce taxes too far. 
D) none of the above. 
A) increase production costs. 
B) lower production costs to the shutdown point. 
C) reduce taxes too far. 
D) none of the above.

Question 19

A retail store cuts the prices of the products it sells to force its competitor to leave the market.This is prohibited by the

Accepted Answer

A) Sherman Act 
B) Robinson-Patman Act 
C) Aldrich Act. 
D) FTC Act 
A) Sherman Act 
B) Robinson-Patman Act 
C) Aldrich Act. 
D) FTC Act

Question 20

-Refer to the above figure.Suppose the government requires the natural monopolist to charge the efficient price.Then profits for the firm will be

Accepted Answer

A) zero. 
B) losses equal to $\mathrm { Q } _ { 4 }$ times distance f-g. 
C) losses equal to $\mathrm { Q } _ { 3 }$ times distance d-e. 
D) profits equal to $\mathrm { Q } _ { 1 }$ times distance a-b. 
A) zero. 
B) losses equal to $\mathrm { Q } _ { 4 }$ times distance f-g. 
C) losses equal to $\mathrm { Q } _ { 3 }$ times distance d-e. 
D) profits equal to $\mathrm { Q } _ { 1 }$ times distance a-b.

Exam 14: Regulation and Antitrust Policy in a Globalized Economy

Financial markets are regulated by

Which of the following acts outlawed selling products at "unreasonably low prices" with the intent of reducing competition?

Commonwealth Edison is the only provider of electricity to many households in the Chicago area.Commonwealth Edison is regulated by the government.This type of regulation is known as

If a natural monopolist is unregulated,then

-In the above figure,what will be the output level produced if average cost pricing is used?

As a result of a conviction under the Sherman Antitrust Act,Standard Oil of New Jersey

-In the above figure,what would be the profit or loss at the profit-maximizing output for this natural monopolist?

One of the basic differences between social and economic regulations is that

The first major law created to control the growth of monopoly power was the

This agency is responsible for investigating complaints of discrimination based on race,religion,sex or age in hiring,promotion,firing,wages,testing,and all other conditions of employment.

What is the problem with marginal cost pricing in the natural monopoly situation? How do regulatory agencies in the United States usually handle the problem?

Cab drivers operating from JFK Airport to the City of New York legally must charge a specific fare.This is an example of

The "capture" in the capture hypothesis occurs because

Which of the following is illegal according to the antitrust laws?

While economic regulation applies to ________ industries,social regulation applies to ________ firms.

The act of Congress which prohibited "unfair or deceptive acts or practices in commerce" is called

Regulation of monopolies that allows prices to reflect only the actual cost of production and no monopoly profits is referred to as

According to the text,critics point out that the costs incurred by firms due to regulations

A retail store cuts the prices of the products it sells to force its competitor to leave the market.This is prohibited by the

-Refer to the above figure.Suppose the government requires the natural monopolist to charge the efficient price.Then profits for the firm will be

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

Filters

While economic regulation applies to industries,social regulation applies to firms.