Question 1

If regulators force a natural monopoly to price as a perfectly competitive firm would, the natural monopolist

Accepted Answer

A)  will experience a lower marginal cost. 
B)  will earn an economic loss. 
C)  will expand its output. 
D)  will experience a rise in long-term average costs. 
A)  will experience a lower marginal cost. 
B)  will earn an economic loss. 
C)  will expand its output. 
D)  will experience a rise in long-term average costs.

Question 2

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 3

What are the major rationales for consumer protection in nonmonopolistic industries?

Accepted Answer

The main rationales for consumer protect

Question 4

Which of the following is NOT a reason for the government to regulate a nonmonopolistic industry?

Accepted Answer

A)  to allow firms to achieve the profit maximizing output 
B)  asymmetric information 
C)  to protect consumer interests 
D)  market failures 
A)  to allow firms to achieve the profit maximizing output 
B)  asymmetric information 
C)  to protect consumer interests 
D)  market failures

Question 5

The Sherman Antitrust Act was passed to

Accepted Answer

A)  protect companies from foreign competition. 
B)  protect the monopoly profits of firms. 
C)  control the growth of monopolies in the U.S. 
D)  prevent market price from equaling marginal cost. 
A)  protect companies from foreign competition. 
B)  protect the monopoly profits of firms. 
C)  control the growth of monopolies in the U.S. 
D)  prevent market price from equaling marginal cost.

Question 6

The Sherman Antitrust Act of 1890 prohibited

Accepted Answer

A)  export tariffs. 
B)  attempts to restrain trade. 
C)  all existing monopolies. 
D)  interstate commerce. 
A)  export tariffs. 
B)  attempts to restrain trade. 
C)  all existing monopolies. 
D)  interstate commerce.

Question 7

-In the above figure, if this natural monopolist were forced to use marginal cost pricing, it would sell the product at the price

Accepted Answer

A)  A. 
B)  C. 
C)  E. 
D)  F. 
A)  A. 
B)  C. 
C)  E. 
D)  F.

Question 8

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 9

When a dog is guarding the henhouse, that is an example of 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 10

This agency regulates workplace safety and health conditions.

Accepted Answer

A)  Environmental Protection Agency 
B)  Consumer Product Safety Commission 
C)  Equal Employment Opportunity Commission 
D)  Occupational Safety and Health Administration 
A)  Environmental Protection Agency 
B)  Consumer Product Safety Commission 
C)  Equal Employment Opportunity Commission 
D)  Occupational Safety and Health Administration

Question 11

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 12

The U.S. antitrust enforcers will likely block a merger if

Accepted Answer

A)  the merging firms already earn excessive profits. 
B)  the merging firms are in different markets. 
C)  the merger will substantially increase market power. 
D)  the degree of concentration declines as a result of the merger. 
A)  the merging firms already earn excessive profits. 
B)  the merging firms are in different markets. 
C)  the merger will substantially increase market power. 
D)  the degree of concentration declines as a result of the merger.

Question 13

The behavior of regulators when trying to win approval for their actions from their entire constituency is best described by the

Accepted Answer

A)  capture hypothesis. 
B)  law of increasing social well-being. 
C)  share-the-gains, share-the-pains hypothesis. 
D)  marginal benefit pricing hypothesis. 
A)  capture hypothesis. 
B)  law of increasing social well-being. 
C)  share-the-gains, share-the-pains hypothesis. 
D)  marginal benefit pricing hypothesis.

Question 14

The Federal Trade Commission (FTC) is a regulatory agency that is responsible for preventing firms from engaging in misleading advertising. This type of regulation 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 15

Which of the following protects people from incompetent or unscrupulous producers?

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 16

Cab drivers operating from JFK Airport to the City of New York legally must charge a specific fare. This is an example of

Accepted Answer

A)  social regulation. 
B)  economic regulation. 
C)  the market share test. 
D)  the rate of return test. 
A)  social regulation. 
B)  economic regulation. 
C)  the market share test. 
D)  the rate of return test.

Question 17

The lemons problem is a situation of

Accepted Answer

A)  perfect competition. 
B)  asymmetric information. 
C)  price discrimination. 
D)  a natural monopoly. 
A)  perfect competition. 
B)  asymmetric information. 
C)  price discrimination. 
D)  a natural monopoly.

Question 18

U.S. securities firms recently agreed to pay a record amount of $1.4 billion in settlement charges brought by government regulators. Regulators claimed that firms had abused investors during the market boom of the 1990s. Abuses included analysts tailoring their research reports and ratings on the stocks they covered in order to win more business for their firm. If this settlement causes Wall Street firms to comply with the letter of the law but they violate the spirit of the law, the firms are engaging in

Accepted Answer

A)  elimination of conflicts of interest. 
B)  creative response. 
C)  the capture hypothesis. 
D)  deregulation. 
A)  elimination of conflicts of interest. 
B)  creative response. 
C)  the capture hypothesis. 
D)  deregulation.

Question 19

The act of offering two or more products for sale as a set is called

Accepted Answer

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

Question 20

When production is characterized by persistently declining long-run average costs as output increases

Accepted Answer

A)  the costs of production are greater when competition exists than when a single firm produces a good. 
B)  it is impossible for two firms to compete in the market. 
C)  the costs are lower if a single firm exists, and even if the firm is unregulated, price will still be lower with a single firm. 
D)  there is no need for the government to limit competition by licensing requirements. 
A)  the costs of production are greater when competition exists than when a single firm produces a good. 
B)  it is impossible for two firms to compete in the market. 
C)  the costs are lower if a single firm exists, and even if the firm is unregulated, price will still be lower with a single firm. 
D)  there is no need for the government to limit competition by licensing requirements.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

If regulators force a natural monopoly to price as a perfectly competitive firm would, the natural monopolist

The regulatory agency most concerned with false advertising is the

What are the major rationales for consumer protection in nonmonopolistic industries?

Which of the following is NOT a reason for the government to regulate a nonmonopolistic industry?

The Sherman Antitrust Act was passed to

The Sherman Antitrust Act of 1890 prohibited

-In the above figure, if this natural monopolist were forced to use marginal cost pricing, it would sell the product at the price

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

When a dog is guarding the henhouse, that is an example of the

This agency regulates workplace safety and health conditions.

An agency that regulates product markets is the

The U.S. antitrust enforcers will likely block a merger if

The behavior of regulators when trying to win approval for their actions from their entire constituency is best described by the

The Federal Trade Commission (FTC) is a regulatory agency that is responsible for preventing firms from engaging in misleading advertising. This type of regulation is known as

Which of the following protects people from incompetent or unscrupulous producers?

Cab drivers operating from JFK Airport to the City of New York legally must charge a specific fare. This is an example of

The lemons problem is a situation of

The act of offering two or more products for sale as a set is called

When production is characterized by persistently declining long-run average costs as output increases

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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