Question 1

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. C

Question 2

-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 C

Question 3

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. B

Question 4

All of the following are exempted from antitrust laws EXCEPT

Accepted Answer

A)  labor unions. 
B)  Microsoft Windows. 
C)  professional baseball. 
D)  hospitals. 
A)  labor unions. 
B)  Microsoft Windows. 
C)  professional baseball. 
D)  hospitals.

Question 5

Which of the following defines monopoly?

Accepted Answer

A)  Sherman Act 
B)  Clayton Act 
C)  Federal Trade Commission Act 
D)  none of the above 
A)  Sherman Act 
B)  Clayton Act 
C)  Federal Trade Commission Act 
D)  none of the above

Question 6

One organization in the United States today that is exempt from antitrust laws is

Accepted Answer

A)  the automobile industry. 
B)  professional baseball. 
C)  the oil industry. 
D)  the steel industry. 
A)  the automobile industry. 
B)  professional baseball. 
C)  the oil industry. 
D)  the steel industry.

Question 7

When a regulator is concerned about pleasing different groups in order to keep employed, this is known as 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 8

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 9

A firm that responds to a regulatory rule in a way that permits technical compliance while allowing the firm to violate the spirit of the regulation has.

Accepted Answer

A)  reduced the scope of the lemons problem. 
B)  shared the gains and pains of regulation. 
C)  engaged in a creative response to regulation. 
D)  become a captured regulator. 
A)  reduced the scope of the lemons problem. 
B)  shared the gains and pains of regulation. 
C)  engaged in a creative response to regulation. 
D)  become a captured regulator.

Question 10

How does social regulation differ from economic regulation?

Accepted Answer

Social regulation focuses on the impact

Question 11

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 12

According to the text, the federal government spends the most taxpayer-provided funds regulating which area of the economy?

Accepted Answer

A)  the environment 
B)  finance and banking 
C)  consumer safety and health 
D)  transportation 
A)  the environment 
B)  finance and banking 
C)  consumer safety and health 
D)  transportation

Question 13

According to the capture hypothesis of regulation

Accepted Answer

A)  regulation favors producers over consumers because the producers were able to pay off the regulators. 
B)  regulation eventually favors producers over consumers because the producers have more at stake than individual consumers. 
C)  regulation benefits the regulators and the legislators who support the regulation by enabling them to obtain favors from both producers and consumers. 
D)  regulation benefits the consumers over producers because the number of consumers is greater than the number of producers, giving the consumers more political clout. 
A)  regulation favors producers over consumers because the producers were able to pay off the regulators. 
B)  regulation eventually favors producers over consumers because the producers have more at stake than individual consumers. 
C)  regulation benefits the regulators and the legislators who support the regulation by enabling them to obtain favors from both producers and consumers. 
D)  regulation benefits the consumers over producers because the number of consumers is greater than the number of producers, giving the consumers more political clout.

Question 14

In a natural monopoly situation

Accepted Answer

A)  there are large economies of scale relative to demand. 
B)  the firm has an upward sloping average cost curve. 
C)  producers try to differentiate their product with advertising. 
D)  there is no need for government regulation. 
A)  there are large economies of scale relative to demand. 
B)  the firm has an upward sloping average cost curve. 
C)  producers try to differentiate their product with advertising. 
D)  there is no need for government regulation.

Question 15

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 16

Which of the following is concerned with social regulation?

Accepted Answer

A)  Federal Reserve Board 
B)  Sherman Commission 
C)  Food and Drug Administration 
D)  Board of Education 
A)  Federal Reserve Board 
B)  Sherman Commission 
C)  Food and Drug Administration 
D)  Board of Education

Question 17

One problem that might occur as a result of economic regulation is

Accepted Answer

A)  the firm may be earning more than a normal rate of return on investment. 
B)  the quality of service might be lowered. 
C)  that social regulation may follow. 
D)  the demand for the good may be greater than the supply. 
A)  the firm may be earning more than a normal rate of return on investment. 
B)  the quality of service might be lowered. 
C)  that social regulation may follow. 
D)  the demand for the good may be greater than the supply.

Question 18

The key issue in determining the relevant product market is

Accepted Answer

A)  the degree of interchangeability between products. 
B)  the specific geographic area in which competing products overlap. 
C)  the production processes used to produce the goods. 
D)  the market share test. 
A)  the degree of interchangeability between products. 
B)  the specific geographic area in which competing products overlap. 
C)  the production processes used to produce the goods. 
D)  the market share test.

Question 19

Social regulation is focused on all of the following EXCEPT

Accepted Answer

A)  the impact of production on the environment and society. 
B)  better working conditions, and safer and better products. 
C)  a better quality of life through a less polluted environment. 
D)  ensuring costs are minimized and benefits are maximized. 
A)  the impact of production on the environment and society. 
B)  better working conditions, and safer and better products. 
C)  a better quality of life through a less polluted environment. 
D)  ensuring costs are minimized and benefits are maximized.

Question 20

If bottled water, soft drinks and juices are included in the definition of the beverage market, then the relevant definition of the market is defined by

Accepted Answer

A)  the locations of products that are produced. 
B)  the low degrees of substitution between products in the market. 
C)  the high degrees of substitution between products in the market. 
D)  a low level of competition among firms producing those products. 
A)  the locations of products that are produced. 
B)  the low degrees of substitution between products in the market. 
C)  the high degrees of substitution between products in the market. 
D)  a low level of competition among firms producing those products.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

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?

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

All of the following are exempted from antitrust laws EXCEPT

Which of the following defines monopoly?

One organization in the United States today that is exempt from antitrust laws is

When a regulator is concerned about pleasing different groups in order to keep employed, this is known as the

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

A firm that responds to a regulatory rule in a way that permits technical compliance while allowing the firm to violate the spirit of the regulation has.

How does social regulation differ from economic regulation?

The first antitrust law in the United States was the

According to the text, the federal government spends the most taxpayer-provided funds regulating which area of the economy?

According to the capture hypothesis of regulation

In a natural monopoly situation

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

Which of the following is concerned with social regulation?

One problem that might occur as a result of economic regulation is

The key issue in determining the relevant product market is

Social regulation is focused on all of the following EXCEPT

If bottled water, soft drinks and juices are included in the definition of the beverage market, then the relevant definition of the market is defined by

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

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

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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