Question 1

Cost-of-service-regulation sets prices by considering

Accepted Answer

A) the actual variable cost of providing the service to the customer. 
B) the actual total cost of providing the service to the customer. 
C) the actual average cost of providing the service to the customer. 
D) the actual marginal cost of providing the service to the customer. 
A) the actual variable cost of providing the service to the customer. 
B) the actual total cost of providing the service to the customer. 
C) the actual average cost of providing the service to the customer. 
D) the actual marginal cost of providing the service to the customer.

Question 2

The feedback effect can be thought of as a type of

Accepted Answer

A) social regulation. 
B) economic regulation. 
C) creative response,which reduces the law's effectiveness. 
D) regulatory lag. 
A) social regulation. 
B) economic regulation. 
C) creative response,which reduces the law's effectiveness. 
D) regulatory lag.

Question 3

Which of the following is NOT a government response to asymmetric information?

Accepted Answer

A) Liability laws 
B) Social regulation 
C) Manufacturer's warranties 
D) Government licensing 
A) Liability laws 
B) Social regulation 
C) Manufacturer's warranties 
D) Government licensing

Question 4

Under rate-of-return regulation,the price is set so that

Accepted Answer

A) price equals the marginal cost of production. 
B) the firm earns a positive economic profit. 
C) the firm earns a monopoly profit. 
D) the firm earns a normal rate of return on investment. 
A) price equals the marginal cost of production. 
B) the firm earns a positive economic profit. 
C) the firm earns a monopoly profit. 
D) the firm earns a normal rate of return on investment.

Question 5

-In the above figure,if this natural monopolist were unregulated,the profit maximizing firm would produce

Accepted Answer

A) at Q1 output rate. 
B) at Q2 output rate. 
C) at Q3 output rate. 
D) past the Q3 output rate. 
A) at Q1 output rate. 
B) at Q2 output rate. 
C) at Q3 output rate. 
D) past the Q3 output rate.

Question 6

The regulation of the prices charged by insurance companies 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 7

Section 1 of the Sherman Antitrust Act makes it illegal to

Accepted Answer

A) form a monopolistically competitive firm. 
B) restrain trade. 
C) price discriminate. 
D) have an oligopoly. 
A) form a monopolistically competitive firm. 
B) restrain trade. 
C) price discriminate. 
D) have an oligopoly.

Question 8

Which of the following is FALSE with respect to regulation?

Accepted Answer

A) Regulated firms commonly try to avoid the effects of regulation whenever they can. 
B) Firms engage in creative responses which conform to the letter of the law but undermine its spirit. 
C) Regulation has resulted in state laws that have made creative response illegal in many states. 
D) Recent regulations have generated feedback effects that undermined the key aim of the rules. 
A) Regulated firms commonly try to avoid the effects of regulation whenever they can. 
B) Firms engage in creative responses which conform to the letter of the law but undermine its spirit. 
C) Regulation has resulted in state laws that have made creative response illegal in many states. 
D) Recent regulations have generated feedback effects that undermined the key aim of the rules.

Question 9

The Interstate Commerce Commission (ICC)regulates railroads,barges and trucks.Suppose technical change lowers the costs of railroads.As a result,the ICC permits railroads to lower prices some but also alters the rates of barges and trucks so they get additional business.The ICC would be acting consistently with

Accepted Answer

A) the capture theory of regulation. 
B) the public interest theory of regulation. 
C) the share-the-gains,share-the-pains theory of regulation. 
D) None of the theories presented in the text since economic regulation is specific to a single industry and not to agencies that cover more than one industry.That is the province of social regulation. 
A) the capture theory of regulation. 
B) the public interest theory of regulation. 
C) the share-the-gains,share-the-pains theory of regulation. 
D) None of the theories presented in the text since economic regulation is specific to a single industry and not to agencies that cover more than one industry.That is the province of social regulation.

Question 10

An agency that regulates product markets is the

Accepted Answer

A) Equal Employment Opportunity Commission. 
B) Environmental Protection Agency. 
C) Federal Trade Commission. 
D) Occupational Safety and Health Administration. 
A) Equal Employment Opportunity Commission. 
B) Environmental Protection Agency. 
C) Federal Trade Commission. 
D) Occupational Safety and Health Administration.

Question 11

"Unfair or deceptive acts or practices in commerce" were prohibited by the

Accepted Answer

A) Clayton Act. 
B) Clayton Act as amended by the Robinson-Patman Act. 
C) Federal Trade Commission Act. 
D) 1938 amendment to the Federal Trade Commission Act. 
A) Clayton Act. 
B) Clayton Act as amended by the Robinson-Patman Act. 
C) Federal Trade Commission Act. 
D) 1938 amendment to the Federal Trade Commission Act.

Question 12

-Refer to the above figure.If the government uses rate-of-return regulation for the natural monopolist,the firm will charge price

Accepted Answer

A)  $\mathrm { P } _ { 5 }$ and sell
$\mathrm { Q } _ { 1 }$ units. 
B)  $P _ { 2 }$ and sell
$\mathrm { Q } _ { 1 }$ units. 
C)  $\mathrm { P } _ { 3 }$ and sell
$\mathrm { Q } _ { 3 }$ units. 
D)  $P _ { 1 }$ and sell
$\mathrm { Q } _ { 4 }$ units. 
A)  $\mathrm { P } _ { 5 }$ and sell
$\mathrm { Q } _ { 1 }$ units. 
B)  $P _ { 2 }$ and sell
$\mathrm { Q } _ { 1 }$ units. 
C)  $\mathrm { P } _ { 3 }$ and sell
$\mathrm { Q } _ { 3 }$ units. 
D)  $P _ { 1 }$ and sell
$\mathrm { Q } _ { 4 }$ units.

Question 13

Suppose that a regulated industry experiences an increase in the price of inputs used to produce the good.According to the capture theory,we would expect

Accepted Answer

A) prices to increase by a little immediately and profits to decrease by a lot. 
B) there will be some increase in price but not immediately. 
C) no increase in price. 
D) a quick increase in price maintains profits in the industry. 
A) prices to increase by a little immediately and profits to decrease by a lot. 
B) there will be some increase in price but not immediately. 
C) no increase in price. 
D) a quick increase in price maintains profits in the industry.

Question 14

According to your text,the annual cost of regulation (federal,state and local)in the United States is estimated to exceed ________ per year.

Accepted Answer

A) $500 million 
B) $900 million 
C) $50 billion 
D) $1 trillion 
A) $500 million 
B) $900 million 
C) $50 billion 
D) $1 trillion

Question 15

Which of the following organizations is exempt from prosecution under the Sherman Antitrust Act (1890)?

Accepted Answer

A) retailers 
B) book publishers 
C) labor unions 
D) television stations 
A) retailers 
B) book publishers 
C) labor unions 
D) television stations

Question 16

-In the above figure,an unregulated natural monopolist will produce output level

Accepted Answer

A) Q1. 
B) Q2. 
C) Q3. 
D) Q4. 
A) Q1. 
B) Q2. 
C) Q3. 
D) Q4.

Question 17

The Sudsy Soda Company will not sell its soft drinks to a restaurant unless that business also buys paper cups from Sudsy.This requirement is an example of

Accepted Answer

A) product versioning. 
B) tie-in sales. 
C) price differentiation. 
D) complementary pricing. 
A) product versioning. 
B) tie-in sales. 
C) price differentiation. 
D) complementary pricing.

Question 18

-Use the above figure.A regulatory commission sets the maximum price this monopolist can charge at P1.If this monopolist were to produce,it

Accepted Answer

A) would produce $\mathrm { Q } _ { 4 }$ output and generate losses. 
B) would produce $\mathrm { Q } _ { 4 }$ output and generate profits. 
C) would produce $\mathrm { Q } _ { 2 }$ output and generate losses. 
D) would produce $\mathrm { Q } _ { 2 }$ output and generate profits. 
A) would produce $\mathrm { Q } _ { 4 }$ output and generate losses. 
B) would produce $\mathrm { Q } _ { 4 }$ output and generate profits. 
C) would produce $\mathrm { Q } _ { 2 }$ output and generate losses. 
D) would produce $\mathrm { Q } _ { 2 }$ output and generate profits.

Question 19

The main goal of antitrust policy is to

Accepted Answer

A) encourage firms to produce at the MR = demand level. 
B) regulate natural monopolies. 
C) prevent the monopolization of industries. 
D) prevent the nationalization of industries. 
A) encourage firms to produce at the MR = demand level. 
B) regulate natural monopolies. 
C) prevent the monopolization of industries. 
D) prevent the nationalization of industries.

Question 20

-Refer to the above figure.If the government requires the natural monopolist to charge the efficient price,it will charge price

Accepted Answer

A)  $\mathrm { P } _ { 5 }$ and sell
$\mathrm { Q } _ { 1 }$ units. 
B)  $P _ { 2 }$ and sell
$\mathrm { Q } _ { 1 }$ units. 
C)  $\mathrm { P } _ { 3 }$ and sell
$\mathrm { Q } _ { 3 }$ units. 
D)  $P _ { 1 }$ and sell
$\mathrm { Q } _ { 4 }$ units. 
A)  $\mathrm { P } _ { 5 }$ and sell
$\mathrm { Q } _ { 1 }$ units. 
B)  $P _ { 2 }$ and sell
$\mathrm { Q } _ { 1 }$ units. 
C)  $\mathrm { P } _ { 3 }$ and sell
$\mathrm { Q } _ { 3 }$ units. 
D)  $P _ { 1 }$ and sell
$\mathrm { Q } _ { 4 }$ units.

Cost-of-service-regulation sets prices by considering

The feedback effect can be thought of as a type of

Which of the following is NOT a government response to asymmetric information?

Under rate-of-return regulation,the price is set so that

-In the above figure,if this natural monopolist were unregulated,the profit maximizing firm would produce

The regulation of the prices charged by insurance companies is known as

Section 1 of the Sherman Antitrust Act makes it illegal to

Which of the following is FALSE with respect to regulation?

An agency that regulates product markets is the

"Unfair or deceptive acts or practices in commerce" were prohibited by the

-Refer to the above figure.If the government uses rate-of-return regulation for the natural monopolist,the firm will charge price

Suppose that a regulated industry experiences an increase in the price of inputs used to produce the good.According to the capture theory,we would expect

According to your text,the annual cost of regulation (federal,state and local)in the United States is estimated to exceed ________ per year.

Which of the following organizations is exempt from prosecution under the Sherman Antitrust Act (1890)?

-In the above figure,an unregulated natural monopolist will produce output level

The Sudsy Soda Company will not sell its soft drinks to a restaurant unless that business also buys paper cups from Sudsy.This requirement is an example of

-Use the above figure.A regulatory commission sets the maximum price this monopolist can charge at P₁.If this monopolist were to produce,it

The main goal of antitrust policy is to

-Refer to the above figure.If the government requires the natural monopolist to charge the efficient price,it will charge 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

Filters

Exam 14: Regulation and Antitrust Policy in a Globalized Economy

Cost-of-service-regulation sets prices by considering

The feedback effect can be thought of as a type of

Which of the following is NOT a government response to asymmetric information?

Under rate-of-return regulation,the price is set so that

-In the above figure,if this natural monopolist were unregulated,the profit maximizing firm would produce

The regulation of the prices charged by insurance companies is known as

Section 1 of the Sherman Antitrust Act makes it illegal to

Which of the following is FALSE with respect to regulation?

An agency that regulates product markets is the

"Unfair or deceptive acts or practices in commerce" were prohibited by the

-Refer to the above figure.If the government uses rate-of-return regulation for the natural monopolist,the firm will charge price

Suppose that a regulated industry experiences an increase in the price of inputs used to produce the good.According to the capture theory,we would expect

According to your text,the annual cost of regulation (federal,state and local)in the United States is estimated to exceed ________ per year.

Which of the following organizations is exempt from prosecution under the Sherman Antitrust Act (1890)?

-In the above figure,an unregulated natural monopolist will produce output level

The Sudsy Soda Company will not sell its soft drinks to a restaurant unless that business also buys paper cups from Sudsy.This requirement is an example of

-Use the above figure.A regulatory commission sets the maximum price this monopolist can charge at P1.If this monopolist were to produce,it

The main goal of antitrust policy is to

-Refer to the above figure.If the government requires the natural monopolist to charge the efficient price,it will charge 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

Filters

-Use the above figure.A regulatory commission sets the maximum price this monopolist can charge at P₁.If this monopolist were to produce,it