Exam 27: Regulation and Antitrust Policy in a Globalized Economy

A common feature of regulated industries is cross-subsidization, which is a situation when one group of customers pays prices above costs while another group of customers pays prices below costs. The one group is subsidizing the other group. Is this practice more consistent with the capture hypothesis or the share-the-gains, share-the-pains theory? Explain.

If a public service commission requires a natural monopoly to set its price equal to the long-run marginal cost, this will result in

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.

-Refer to the above figure. From the standpoint of society, the optimal output is

-In the above figure, if this natural monopolist were forced to use marginal cost pricing, it would produce

With average cost pricing, the monopolist

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

The main rationale for government regulatory functions is

-Use the above figure. Suppose that a regulatory agency requires this natural monopolist to engage in marginal cost pricing. This would lead to

-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 theory of regulatory behavior that suggests that regulators must consider the demands of legislators, consumers, and members of the regulated agency is called

All of the following are exempt from antitrust laws EXCEPT

-Use the above figure. If a commission regulates the above monopoly using fair-return (average cost pricing), then the industry's output will be ________ and the product's price will be ________.

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

The theory that regulators' behavior will eventually be compromised by the special interests they regulate is known as the

The first step in enforcing any antitrust policy is to

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

The goals of rate regulation have included the prevention of

Suppose that smart phone producers meet secretly and agree to issue the smart phones of their most successful models sequentially and at the same price that maximizes their profits. After hearing about the secret meeting the U.S. Justice Department is most likely to file charges under the

Financial markets are regulated by