Question 1

Which of the following is a possible market solution to the lemons problem?

Accepted Answer

A) Producers might offer product guarantees and warranties. 
B) Producers might be required to meet certain legal standards to obtain licenses granting the right to sell their products. 
C) Government agencies might be charged with directly overseeing production and distribution of certain products. 
D) Liability laws might be established to ensure that firms selling certain products must face penalties in the event the products function poorly. 
A) Producers might offer product guarantees and warranties. 
B) Producers might be required to meet certain legal standards to obtain licenses granting the right to sell their products. 
C) Government agencies might be charged with directly overseeing production and distribution of certain products. 
D) Liability laws might be established to ensure that firms selling certain products must face penalties in the event the products function poorly.

Question 2

What is the relationship between the Sherman Antitrust Act and the Clayton Act?

Accepted Answer

A) The Clayton Act was the first act passed and the Sherman Antitrust Act was the second. 
B) The Sherman Antitrust Act encouraged competition among firms in the U.S.while the Clayton Act encouraged competition among foreign firms. 
C) The Clayton Act strengthened the Sherman Antitrust Act by limiting some very specific business practices. 
D) Both Acts deal with issues of setting price and quantity for regulated industries. 
A) The Clayton Act was the first act passed and the Sherman Antitrust Act was the second. 
B) The Sherman Antitrust Act encouraged competition among firms in the U.S.while the Clayton Act encouraged competition among foreign firms. 
C) The Clayton Act strengthened the Sherman Antitrust Act by limiting some very specific business practices. 
D) Both Acts deal with issues of setting price and quantity for regulated industries.

Question 3

If antitrust legislation is successful,then the monopolistic firm will

Accepted Answer

A) decrease output and charge a lower price than before. 
B) increase output and charge a higher price than before. 
C) increase output and charge a lower price than before. 
D) decrease output and charge a higher price than before. 
A) decrease output and charge a lower price than before. 
B) increase output and charge a higher price than before. 
C) increase output and charge a lower price than before. 
D) decrease output and charge a higher price than before.

Question 4

Suppose OSHA requires a factory to install specific safety equipment to reduce the number of injuries in the factory.Would the number of accidents necessarily decline? Why or why not?

Accepted Answer

No.If the feedback effect is t

Question 5

The type of regulation that attempts to keep prices and the rate of return in an industry at a competitive level 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 6

Which of the following is most subject to the lemons problem?

Accepted Answer

A) credence goods 
B) homogeneous goods 
C) search goods 
D) inferior goods 
A) credence goods 
B) homogeneous goods 
C) search goods 
D) inferior goods

Question 7

A possible market solution that a reputable firm can engage in when faced with the lemons problem is

Accepted Answer

A) to offer a warranty. 
B) to engage in externalities. 
C) to create asymmetric information. 
D) to use average cost pricing. 
A) to offer a warranty. 
B) to engage in externalities. 
C) to create asymmetric information. 
D) to use average cost pricing.

Question 8

The first antitrust law in the United States was the

Accepted Answer

A) Clayton Act. 
B) Contestable Markets Act. 
C) the Federal Trade Commission Act. 
D) Sherman Antitrust Act. 
A) Clayton Act. 
B) Contestable Markets Act. 
C) the Federal Trade Commission Act. 
D) Sherman Antitrust Act.

Question 9

Using a graph,show the price-output combination of a natural monopoly without regulation and the price-output combination if the government requires the monopoly to earn a normal rate of return.What are economic profits in each situation?

Accepted Answer

@#IMG-DLM& In the above figure,the profit-maximizi

Question 10

The Federal Register

Accepted Answer

A) itemizes state and local government spending. 
B) is used to track immigration. 
C) publishes all the new federal regulatory rules. 
D) has decreased in size. 
A) itemizes state and local government spending. 
B) is used to track immigration. 
C) publishes all the new federal regulatory rules. 
D) has decreased in size.

Question 11

When regulators identify with the special interests of the industry they regulate,this behavior conforms with the

Accepted Answer

A) share-the-gains,share-the-pains hypothesis. 
B) rate-of-return hypothesis. 
C) lemon market hypothesis. 
D) capture hypothesis. 
A) share-the-gains,share-the-pains hypothesis. 
B) rate-of-return hypothesis. 
C) lemon market hypothesis. 
D) capture hypothesis.

Question 12

Which of the following is an example of an agency concerned with social regulation?

Accepted Answer

A) Federal Communications Commission 
B) Securities and Exchange Commission 
C) Consumer Product Safety Commission 
D) Federal Energy Regulatory Commission 
A) Federal Communications Commission 
B) Securities and Exchange Commission 
C) Consumer Product Safety Commission 
D) Federal Energy Regulatory Commission

Question 13

What is the main difference between economic regulation and social regulation?

Accepted Answer

Economic regulation involves only partic

Question 14

In marginal cost pricing,the natural monopoly would have to set price equal to

Accepted Answer

A) AFC. 
B) AVC. 
C) ATC. 
D) MC. 
A) AFC. 
B) AVC. 
C) ATC. 
D) MC.

Question 15

Suppose that in an industry,firm X has 50 percent market share,firm Y has 35 percent market share,and firm Z has 10 percent market share.Which of the following mergers is NOT likely to be challenged by the Federal Trade Commission?

Accepted Answer

A) A merger between firms X and Y 
B) A merger between firms Y and Z 
C) A merger between firms X and Z 
D) Any merger of two firms among those firms is likely to be challenged. 
A) A merger between firms X and Y 
B) A merger between firms Y and Z 
C) A merger between firms X and Z 
D) Any merger of two firms among those firms is likely to be challenged.

Question 16

When Microsoft put together a set of products with the Windows operating system,it was practicing

Accepted Answer

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

Question 17

One of the elements of monopolization is

Accepted Answer

A) having a monopoly. 
B) wanting to be a monopoly and wanting to earn monopoly profits. 
C) monopoly pricing. 
D) the willful acquisition of monopoly power. 
A) having a monopoly. 
B) wanting to be a monopoly and wanting to earn monopoly profits. 
C) monopoly pricing. 
D) the willful acquisition of monopoly power.

Question 18

The regulatory agency most concerned with false advertising is the

Accepted Answer

A) Antitrust Division of the Justice Department. 
B) National Labor Relations Board. 
C) Federal Deposit Insurance Corp. 
D) Federal Trade Commission. 
A) Antitrust Division of the Justice Department. 
B) National Labor Relations Board. 
C) Federal Deposit Insurance Corp. 
D) Federal Trade Commission.

Question 19

Which of the following defines monopolization?

Accepted Answer

A) The Securities and Exchange Commission 
B) The Federal Reserve 
C) U.S.Supreme Court 
D) Federal Trade Commission Act 
A) The Securities and Exchange Commission 
B) The Federal Reserve 
C) U.S.Supreme Court 
D) Federal Trade Commission Act

Question 20

The goals of rate regulation have included the prevention of

Accepted Answer

A) monopoly profits. 
B) oligopolistic pricing. 
C) marginal cost pricing. 
D) average cost pricing. 
A) monopoly profits. 
B) oligopolistic pricing. 
C) marginal cost pricing. 
D) average cost pricing.

Exam 14: Regulation and Antitrust Policy in a Globalized Economy

Which of the following is a possible market solution to the lemons problem?

What is the relationship between the Sherman Antitrust Act and the Clayton Act?

If antitrust legislation is successful,then the monopolistic firm will

Suppose OSHA requires a factory to install specific safety equipment to reduce the number of injuries in the factory.Would the number of accidents necessarily decline? Why or why not?

The type of regulation that attempts to keep prices and the rate of return in an industry at a competitive level is referred to as

Which of the following is most subject to the lemons problem?

A possible market solution that a reputable firm can engage in when faced with the lemons problem is

The first antitrust law in the United States was the

Using a graph,show the price-output combination of a natural monopoly without regulation and the price-output combination if the government requires the monopoly to earn a normal rate of return.What are economic profits in each situation?

The Federal Register

When regulators identify with the special interests of the industry they regulate,this behavior conforms with the

Which of the following is an example of an agency concerned with social regulation?

What is the main difference between economic regulation and social regulation?

In marginal cost pricing,the natural monopoly would have to set price equal to

Suppose that in an industry,firm X has 50 percent market share,firm Y has 35 percent market share,and firm Z has 10 percent market share.Which of the following mergers is NOT likely to be challenged by the Federal Trade Commission?

When Microsoft put together a set of products with the Windows operating system,it was practicing

One of the elements of monopolization is

The regulatory agency most concerned with false advertising is the

Which of the following defines monopolization?

The goals of rate regulation have included the prevention of

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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