Question 1

-Use the above figure. If this monopolist was not regulated, the profit-maximizing quantity and price would be

Accepted Answer

A)  Q2 and P1. 
B)  Q2 and P3. 
C)  Q3 and P2. 
D)  Q4 and P1. 
A)  Q2 and P1. 
B)  Q2 and P3. 
C)  Q3 and P2. 
D)  Q4 and P1.

Question 2

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 3

The type of mergers that the Federal Trade Commission will most likely challenge are

Accepted Answer

A)  mergers of firms within a relevant market. 
B)  mergers of firms in different markets. 
C)  mergers of firms that will generate economies of scale. 
D)  mergers of firms in different geographical locations. 
A)  mergers of firms within a relevant market. 
B)  mergers of firms in different markets. 
C)  mergers of firms that will generate economies of scale. 
D)  mergers of firms in different geographical locations.

Question 4

The potential for a decline in product quality due to asymmetric information is commonly referred to as

Accepted Answer

A)  the lemons problem. 
B)  planned obsolescence. 
C)  diminishing marginal product. 
D)  the externality problem. 
A)  the lemons problem. 
B)  planned obsolescence. 
C)  diminishing marginal product. 
D)  the externality problem.

Question 5

Discuss the Clayton Act and the Federal Trade Commission Act, and relevant amendments to them.

Accepted Answer

The Clayton Act was passed to prohibit o

Question 6

Which of the following mergers would most likely be challenged by the Federal Trade Commission?

Accepted Answer

A)  two restaurants in a large metro area 
B)  two largest wireless service providers in the U.S. wireless communication industry 
C)  an automaker and an insurance company 
D)  one oil refinery in the U.S. and another oil refinery in Canada 
A)  two restaurants in a large metro area 
B)  two largest wireless service providers in the U.S. wireless communication industry 
C)  an automaker and an insurance company 
D)  one oil refinery in the U.S. and another oil refinery in Canada

Question 7

The FTC is

Accepted Answer

A)  the act that prevents producers from driving out smaller competitors by means of selected discriminatory price cuts. 
B)  the commission that investigates unfair competitive practices such as misleading advertising. 
C)  an agency which has been set up to regulate the federal government. 
D)  the agency set up to regulate hospitals. 
A)  the act that prevents producers from driving out smaller competitors by means of selected discriminatory price cuts. 
B)  the commission that investigates unfair competitive practices such as misleading advertising. 
C)  an agency which has been set up to regulate the federal government. 
D)  the agency set up to regulate hospitals.

Question 8

Regulation imposed by such organizations as the Food and Drug Administration or the Environmental Protection Agency seeking to protect the welfare of people in our nation is referred to as

Accepted Answer

A)  moral regulation. 
B)  natural regulation. 
C)  rate-of-return regulation. 
D)  social regulation. 
A)  moral regulation. 
B)  natural regulation. 
C)  rate-of-return regulation. 
D)  social regulation.

Question 9

When companies sell slightly different forms of a product to different groups of customers, this is known as

Accepted Answer

A)  market testing. 
B)  editions. 
C)  adaptations. 
D)  versioning. 
A)  market testing. 
B)  editions. 
C)  adaptations. 
D)  versioning.

Question 10

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 11

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 12

Which of the following is NOT a likely market solution to the lemons problem?

Accepted Answer

A)  average cost pricing 
B)  product warranty 
C)  industry standard 
D)  product certification 
A)  average cost pricing 
B)  product warranty 
C)  industry standard 
D)  product certification

Question 13

All of the following are exempt from antitrust enforcement EXCEPT

Accepted Answer

A)  professional baseball. 
B)  labor unions. 
C)  hospitals. 
D)  television and radio stations. 
A)  professional baseball. 
B)  labor unions. 
C)  hospitals. 
D)  television and radio stations.

Question 14

Suppose that a regulatory agency has imposed marginal cost pricing on a natural monopolist. We expect that

Accepted Answer

A)  the firm will earn only a normal profit. 
B)  the firm's average total cost of production is rising over the relevant range of production. 
C)  the firm will rise its price above marginal cost. 
D)  the firm will earn economic losses. 
A)  the firm will earn only a normal profit. 
B)  the firm's average total cost of production is rising over the relevant range of production. 
C)  the firm will rise its price above marginal cost. 
D)  the firm will earn economic losses.

Question 15

Defining the "relevant market" involves looking at two components. They are

Accepted Answer

A)  the competitive market and the dominant market. 
B)  the local market and the national market. 
C)  the geographic market and the product market. 
D)  the goods market and the services market. 
A)  the competitive market and the dominant market. 
B)  the local market and the national market. 
C)  the geographic market and the product market. 
D)  the goods market and the services market.

Question 16

In the United States, antitrust enforcement focuses on

Accepted Answer

A)  the profitability of the leading firms in an industry. 
B)  the degree of market concentration within a market. 
C)  the average level of prices charged by firms. 
D)  the price-cost margin of an industry. 
A)  the profitability of the leading firms in an industry. 
B)  the degree of market concentration within a market. 
C)  the average level of prices charged by firms. 
D)  the price-cost margin of an industry.

Question 17

-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 18

Cost-of-service regulation allows regulated companies to charge prices that

Accepted Answer

A)  reflect the cost of regulating the industry, plus the marginal cost of the product. 
B)  allow monopoly profits to the producer. 
C)  reflect the actual average cost of providing the services to the customer. 
D)  are determined by competition in other geographic markets. 
A)  reflect the cost of regulating the industry, plus the marginal cost of the product. 
B)  allow monopoly profits to the producer. 
C)  reflect the actual average cost of providing the services to the customer. 
D)  are determined by competition in other geographic markets.

Question 19

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 20

When promoting average cost pricing, regulators

Accepted Answer

A)  include what they consider to be a normal rate of return on investment. 
B)  encourage firms to produce at the output level where price equals marginal cost. 
C)  fail to consider a return to investors, so regulated firms often have a hard time raising investment funds. 
D)  inflate costs so much that price ends up as large as would prevail under unregulated monopoly. 
A)  include what they consider to be a normal rate of return on investment. 
B)  encourage firms to produce at the output level where price equals marginal cost. 
C)  fail to consider a return to investors, so regulated firms often have a hard time raising investment funds. 
D)  inflate costs so much that price ends up as large as would prevail under unregulated monopoly.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

-Use the above figure. If this monopolist was not regulated, the profit-maximizing quantity and price would be

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

The type of mergers that the Federal Trade Commission will most likely challenge are

The potential for a decline in product quality due to asymmetric information is commonly referred to as

Discuss the Clayton Act and the Federal Trade Commission Act, and relevant amendments to them.

Which of the following mergers would most likely be challenged by the Federal Trade Commission?

The FTC is

Regulation imposed by such organizations as the Food and Drug Administration or the Environmental Protection Agency seeking to protect the welfare of people in our nation is referred to as

When companies sell slightly different forms of a product to different groups of customers, this is known as

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

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

Which of the following is NOT a likely market solution to the lemons problem?

All of the following are exempt from antitrust enforcement EXCEPT

Suppose that a regulatory agency has imposed marginal cost pricing on a natural monopolist. We expect that

Defining the "relevant market" involves looking at two components. They are

In the United States, antitrust enforcement focuses on

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

Cost-of-service regulation allows regulated companies to charge prices that

One of the elements of monopolization is

When promoting average cost pricing, regulators

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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