Question 1

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 2

The Federal Register

Accepted Answer

A)  itemizes state and local government spending. 
B)  is used to track immigration. 
C)  publishes all the new federal regulatory rules. 
D)  has decreased in size. 
A)  itemizes state and local government spending. 
B)  is used to track immigration. 
C)  publishes all the new federal regulatory rules. 
D)  has decreased in size.

Question 3

Which antitrust act was passed to protect independent retailers from "unfair discrimination" by chain stores?

Accepted Answer

A)  Federal Trade Commission Act 
B)  Robinson-Patman Act 
C)  Sherman Act 
D)  Wheeler-Lea Act 
A)  Federal Trade Commission Act 
B)  Robinson-Patman Act 
C)  Sherman Act 
D)  Wheeler-Lea Act

Question 4

Commonwealth Edison is the only provider of electricity to many households in the Chicago area. Commonwealth Edison is regulated by the government. 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 5

A potential benefit that comes from social regulations would be

Accepted Answer

A)  higher costs. 
B)  a cleaner environment. 
C)  higher tax collections. 
D)  more layoffs. 
A)  higher costs. 
B)  a cleaner environment. 
C)  higher tax collections. 
D)  more layoffs.

Question 6

Which of the following federal agencies is engaged in economic regulation?

Accepted Answer

A)  Occupational Safety and Health Administration 
B)  Federal Motor Carrier Safety Administration 
C)  Food and Drug Administration 
D)  Consumer Product Safety Commission 
A)  Occupational Safety and Health Administration 
B)  Federal Motor Carrier Safety Administration 
C)  Food and Drug Administration 
D)  Consumer Product Safety Commission

Question 7

An unregulated natural monopolist would produce to the point at which

Accepted Answer

A)  P = AC. 
B)  MR = AC. 
C)  MR = MC. 
D)  P = MR. 
A)  P = AC. 
B)  MR = AC. 
C)  MR = MC. 
D)  P = MR.

Question 8

Regulation that is based upon the cost of providing the good or service is known as

Accepted Answer

A)  rate-of-return regulation. 
B)  cost-of-service regulation. 
C)  social regulation. 
D)  deregulation. 
A)  rate-of-return regulation. 
B)  cost-of-service regulation. 
C)  social regulation. 
D)  deregulation.

Question 9

Behavior on the part of the firm that allows it to comply with the law but violate the spirit reducing the law's effect is

Accepted Answer

A)  a dominant strategy. 
B)  a creative response. 
C)  the lemons problem. 
D)  a positive-sum effect. 
A)  a dominant strategy. 
B)  a creative response. 
C)  the lemons problem. 
D)  a positive-sum effect.

Question 10

"Regulations do not always have the intended result." Do you agree or disagree? Why?

Accepted Answer

Agree. Firms often try to avoid the effe

Question 11

The idea behind antitrust legislation is to

Accepted Answer

A)  promote competition in the market. 
B)  justify deregulation of industries. 
C)  implement contestable markets. 
D)  create larger firms. 
A)  promote competition in the market. 
B)  justify deregulation of industries. 
C)  implement contestable markets. 
D)  create larger firms.

Question 12

The total cost of federal regulation includes

Accepted Answer

A)  the funding of government agencies overseeing compliance, the compliance cost for the regulated firms, and the opportunity cost of regulation for the firms. 
B)  the funding of government agencies overseeing compliance less the compliance cost for the regulated firms and the opportunity cost of regulation for the firms. 
C)  only the cost of compliance by the regulated firms. 
D)  only the funding of the regulatory agencies. 
A)  the funding of government agencies overseeing compliance, the compliance cost for the regulated firms, and the opportunity cost of regulation for the firms. 
B)  the funding of government agencies overseeing compliance less the compliance cost for the regulated firms and the opportunity cost of regulation for the firms. 
C)  only the cost of compliance by the regulated firms. 
D)  only the funding of the regulatory agencies.

Question 13

This agency is responsible for preventing businesses from engaging in misleading advertising, unfair trade practices, and monopolistic actions, as well as for protecting consumer rights.

Accepted Answer

A)  Environmental Protection Agency 
B)  Food and Drug Administration 
C)  Equal Employment Opportunity Commission 
D)  Federal Trade Commission 
A)  Environmental Protection Agency 
B)  Food and Drug Administration 
C)  Equal Employment Opportunity Commission 
D)  Federal Trade Commission

Question 14

All of the following are regulatory agencies EXCEPT

Accepted Answer

A)  the National Rifle Association. 
B)  the Environmental Protection Agency. 
C)  the Food and Drug Administration. 
D)  the Occupational Safety and Health Administration. 
A)  the National Rifle Association. 
B)  the Environmental Protection Agency. 
C)  the Food and Drug Administration. 
D)  the Occupational Safety and Health Administration.

Question 15

Discuss the important provisions of the Sherman Antitrust Act of 1890.

Accepted Answer

The Sherman Antitrust Act prohibits cont

Question 16

The two basic types of government regulation are

Accepted Answer

A)  regulation of natural monopolies and regulation of cartels. 
B)  economic regulation and industry regulation. 
C)  social regulation and labor law. 
D)  social regulation and economic regulation. 
A)  regulation of natural monopolies and regulation of cartels. 
B)  economic regulation and industry regulation. 
C)  social regulation and labor law. 
D)  social regulation and economic regulation.

Question 17

One goal of rate-of-return regulation is the prevention of

Accepted Answer

A)  free market entry. 
B)  positive economic profits. 
C)  poor quality service. 
D)  environmental degradation. 
A)  free market entry. 
B)  positive economic profits. 
C)  poor quality service. 
D)  environmental degradation.

Question 18

One weakness of the Sherman Act is that

Accepted Answer

A)  it fails to clearly define restraint of trade. 
B)  it applies only to foreign monopolies. 
C)  it applies only to the steel and railroad industries. 
D)  none of the above. 
A)  it fails to clearly define restraint of trade. 
B)  it applies only to foreign monopolies. 
C)  it applies only to the steel and railroad industries. 
D)  none of the above.

Question 19

A theory of regulatory behavior, which states that regulators must take into account the preferences of legislators, producers, and consumers, is the

Accepted Answer

A)  capture theory. 
B)  share-the-gains, share-the-pains theory. 
C)  public interest theory. 
D)  general interests theory. 
A)  capture theory. 
B)  share-the-gains, share-the-pains theory. 
C)  public interest theory. 
D)  general interests theory.

Question 20

Distinguish between cost-of-service regulation and rate-of return regulation. What problem is inherent in both types of regulation?

Accepted Answer

Cost-of-service regulation allows the re

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

The main goal of antitrust policy is to

The Federal Register

Which antitrust act was passed to protect independent retailers from "unfair discrimination" by chain stores?

Commonwealth Edison is the only provider of electricity to many households in the Chicago area. Commonwealth Edison is regulated by the government. This type of regulation is known as

A potential benefit that comes from social regulations would be

Which of the following federal agencies is engaged in economic regulation?

An unregulated natural monopolist would produce to the point at which

Regulation that is based upon the cost of providing the good or service is known as

Behavior on the part of the firm that allows it to comply with the law but violate the spirit reducing the law's effect is

"Regulations do not always have the intended result." Do you agree or disagree? Why?

The idea behind antitrust legislation is to

The total cost of federal regulation includes

This agency is responsible for preventing businesses from engaging in misleading advertising, unfair trade practices, and monopolistic actions, as well as for protecting consumer rights.

All of the following are regulatory agencies EXCEPT

Discuss the important provisions of the Sherman Antitrust Act of 1890.

The two basic types of government regulation are

One goal of rate-of-return regulation is the prevention of

One weakness of the Sherman Act is that

A theory of regulatory behavior, which states that regulators must take into account the preferences of legislators, producers, and consumers, is the

Distinguish between cost-of-service regulation and rate-of return regulation. What problem is inherent in both types of regulation?

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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