Question 1

The law passed by Congress in 1914 that was designed to sharpen or define further the vagueness of the Sherman Act is called

Accepted Answer

A)  the Robinson-Patman Act. 
B)  the Wheeler-Lea Act. 
C)  the Clayton Act. 
D)  the Federal Trade Commission Act. 
A)  the Robinson-Patman Act. 
B)  the Wheeler-Lea Act. 
C)  the Clayton Act. 
D)  the Federal Trade Commission Act.

Question 2

Which of the following will NOT be true if the antitrust laws are successful?

Accepted Answer

A)  Producers will earn zero economic profits in the long-run. 
B)  Firms will not restrict output. 
C)  Firms will produce the competitive output. 
D)  Firms will produce the quantity at which marginal cost equals marginal revenue and charge a price that is greater than marginal cost. 
A)  Producers will earn zero economic profits in the long-run. 
B)  Firms will not restrict output. 
C)  Firms will produce the competitive output. 
D)  Firms will produce the quantity at which marginal cost equals marginal revenue and charge a price that is greater than marginal cost.

Question 3

Suppose OSHA requires a factory to install specific safety equipment to reduce the number of injuries in the factory. Would the number of accidents necessarily decline? Why or why not?

Accepted Answer

No. If the feedback effect is

Question 4

If a regulator forced a natural monopolist to set P = MC

Accepted Answer

A)  the monopolist would earn economic profits. 
B)  the monopolist would suffer economic losses. 
C)  the monopolist would break even. 
D)  the monopolist would earn monopolistic profits. 
A)  the monopolist would earn economic profits. 
B)  the monopolist would suffer economic losses. 
C)  the monopolist would break even. 
D)  the monopolist would earn monopolistic profits.

Question 5

-Refer to the above figure. If the government requires the natural monopolist to charge the efficient price, it will charge price

Accepted Answer

A)  P5 and sell Q1 units. 
B)  P2 and sell Q1 units. 
C)  P3 and sell Q3 units. 
D)  P1 and sell Q4 units. 
A)  P5 and sell Q1 units. 
B)  P2 and sell Q1 units. 
C)  P3 and sell Q3 units. 
D)  P1 and sell Q4 units.

Question 6

One key purpose of economic regulation is

Accepted Answer

A)  to force a firm to produce at the point at which marginal cost equals marginal revenue. 
B)  to control the quality of service provided by a monopolist. 
C)  to control the price that regulated enterprises are allowed to charge. 
D)  to focus on the impact of production on the environment and society, the working conditions under which goods and services are produced, and sometimes the physical attributes of goods. 
A)  to force a firm to produce at the point at which marginal cost equals marginal revenue. 
B)  to control the quality of service provided by a monopolist. 
C)  to control the price that regulated enterprises are allowed to charge. 
D)  to focus on the impact of production on the environment and society, the working conditions under which goods and services are produced, and sometimes the physical attributes of goods.

Question 7

Which of the following statements can correctly be made about social regulation? I. Extensive social regulation may have an anticompetitive effect.
II) The benefits of social regulation are easier to measure than are the costs of social regulation.

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 8

Regulation that keeps the rate of return in the industry competitive 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

Which of the following is NOT a government response to asymmetric information?

Accepted Answer

A)  liability laws 
B)  social regulation 
C)  manufacturer's warranties 
D)  government licensing 
A)  liability laws 
B)  social regulation 
C)  manufacturer's warranties 
D)  government licensing

Question 10

Which of the following is the BEST example of a natural monopoly?

Accepted Answer

A)  book publisher 
B)  electric utility 
C)  coffee shop 
D)  airline 
A)  book publisher 
B)  electric utility 
C)  coffee shop 
D)  airline

Question 11

What is the relationship between the Sherman Antitrust Act and the Clayton Act?

Accepted Answer

A)  The Clayton Act was the first act passed and the Sherman Antitrust Act was the second. 
B)  The Sherman Antitrust Act encouraged competition among firms in the U.S. while the Clayton Act encouraged competition among foreign firms. 
C)  The Clayton Act strengthened the Sherman Antitrust Act by limiting some very specific business practices. 
D)  Both Acts deal with issues of setting price and quantity for regulated industries. 
A)  The Clayton Act was the first act passed and the Sherman Antitrust Act was the second. 
B)  The Sherman Antitrust Act encouraged competition among firms in the U.S. while the Clayton Act encouraged competition among foreign firms. 
C)  The Clayton Act strengthened the Sherman Antitrust Act by limiting some very specific business practices. 
D)  Both Acts deal with issues of setting price and quantity for regulated industries.

Question 12

This agency develops and enforces environmental standards for air, water, toxic waste, and noise.

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 13

Under rate-of-return regulation, average cost pricing

Accepted Answer

A)  is inflated so the firm can make economic profits. 
B)  includes variable costs but not a cost for capital. 
C)  includes what they consider to be a fair rate of return on investment. 
D)  includes a cost for capital that generates an above normal rate of return. 
A)  is inflated so the firm can make economic profits. 
B)  includes variable costs but not a cost for capital. 
C)  includes what they consider to be a fair rate of return on investment. 
D)  includes a cost for capital that generates an above normal rate of return.

Question 14

Since 1970, federal expenditures by regulatory agencies have

Accepted Answer

A)  remained constant. 
B)  decreased slightly. 
C)  increased dramatically. 
D)  increased slightly. 
A)  remained constant. 
B)  decreased slightly. 
C)  increased dramatically. 
D)  increased slightly.

Question 15

Which of the following is exempt from antitrust laws?

Accepted Answer

A)  professional football 
B)  petroleum companies 
C)  airlines 
D)  hospitals 
A)  professional football 
B)  petroleum companies 
C)  airlines 
D)  hospitals

Question 16

The regulation of the prices charged by insurance companies 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 17

In average cost pricing, the natural monopoly would have to set price equal to

Accepted Answer

A)  AFC. 
B)  AVC. 
C)  ATC. 
D)  MC. 
A)  AFC. 
B)  AVC. 
C)  ATC. 
D)  MC.

Question 18

One of the agencies responsible for enforcement of antitrust policy is

Accepted Answer

A)  the Trust Division of Congress. 
B)  the Federal Trade Commission. 
C)  the World Trade Organization. 
D)  the Food and Drug Administration. 
A)  the Trust Division of Congress. 
B)  the Federal Trade Commission. 
C)  the World Trade Organization. 
D)  the Food and Drug Administration.

Question 19

Which of the following is NOT an objective of economic regulation?

Accepted Answer

A)  to regulate the prices enterprises are allowed to charge 
B)  to fix prices so that they are never allowed to rise 
C)  to keep rates of return in an industry at a competitive level 
D)  to prevent monopoly profits 
A)  to regulate the prices enterprises are allowed to charge 
B)  to fix prices so that they are never allowed to rise 
C)  to keep rates of return in an industry at a competitive level 
D)  to prevent monopoly profits

Question 20

Acme Inc. found a tricky way to conform to the letter of the law with respect to new EPA regulations, even though they violated the spirit of the law. This is called

Accepted Answer

A)  the capture theory. 
B)  collusive response. 
C)  share-the-gains, share-the-pains theory. 
D)  creative response. 
A)  the capture theory. 
B)  collusive response. 
C)  share-the-gains, share-the-pains theory. 
D)  creative response.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

The law passed by Congress in 1914 that was designed to sharpen or define further the vagueness of the Sherman Act is called

Which of the following will NOT be true if the antitrust laws are successful?

Suppose OSHA requires a factory to install specific safety equipment to reduce the number of injuries in the factory. Would the number of accidents necessarily decline? Why or why not?

If a regulator forced a natural monopolist to set P = MC

-Refer to the above figure. If the government requires the natural monopolist to charge the efficient price, it will charge price

One key purpose of economic regulation is

Which of the following statements can correctly be made about social regulation? I. Extensive social regulation may have an anticompetitive effect. II) The benefits of social regulation are easier to measure than are the costs of social regulation.

Regulation that keeps the rate of return in the industry competitive is known as

Which of the following is NOT a government response to asymmetric information?

Which of the following is the BEST example of a natural monopoly?

What is the relationship between the Sherman Antitrust Act and the Clayton Act?

This agency develops and enforces environmental standards for air, water, toxic waste, and noise.

Under rate-of-return regulation, average cost pricing

Since 1970, federal expenditures by regulatory agencies have

Which of the following is exempt from antitrust laws?

The regulation of the prices charged by insurance companies is known as

In average cost pricing, the natural monopoly would have to set price equal to

One of the agencies responsible for enforcement of antitrust policy is

Which of the following is NOT an objective of economic regulation?

Acme Inc. found a tricky way to conform to the letter of the law with respect to new EPA regulations, even though they violated the spirit of the law. This is called

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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