Question 1

Which of the following are the three laws that define the U.S government's approach to antitrust?

Accepted Answer

A) The Wilmington, Jackson, and International Trade Commission Acts 
B) The Springfield, Clayton, and Trade Commission Acts 
C) The Sherman, Clayton, and Federal Trade Commission Acts 
D) The Sherman, Jackson, and Regional Trade Commissions Acts 
E) The Jackson, Charleston and Sherman Monopoly Restrictive Trade Acts 
A) The Wilmington, Jackson, and International Trade Commission Acts 
B) The Springfield, Clayton, and Trade Commission Acts 
C) The Sherman, Clayton, and Federal Trade Commission Acts 
D) The Sherman, Jackson, and Regional Trade Commissions Acts 
E) The Jackson, Charleston and Sherman Monopoly Restrictive Trade Acts

Question 2

The first phase of antitrust policy in the U.S.began with the passage of the Sherman Antitrust Act in 1890.To judge a firm's action, the courts in this period used:

Accepted Answer

A) a per se rule. 
B) a rule of reason. 
C) a rule of thumb. 
D) the 80-20 rule. 
E) strict enforcement rule. 
A) a per se rule. 
B) a rule of reason. 
C) a rule of thumb. 
D) the 80-20 rule. 
E) strict enforcement rule.

Question 3

The Justice Department of the U.S.classifies the industries on the basis of the Herfindahl index as:

Accepted Answer

A) below 500: highly competitive;500-1000: moderately competitive;above 1000: highly concentrated. 
B) below 1000: highly competitive;1000-1500: moderately competitive;above 1500: highly concentrated. 
C) below 500: highly competitive;500-1500: moderately competitive;above 1500: highly concentrated. 
D) below 1000: highly competitive;1000-1800: moderately competitive;above 1800: highly concentrated. 
E) below 1500: highly competitive;1500-2000: moderately competitive;above 2000: highly concentrated. 
A) below 500: highly competitive;500-1000: moderately competitive;above 1000: highly concentrated. 
B) below 1000: highly competitive;1000-1500: moderately competitive;above 1500: highly concentrated. 
C) below 500: highly competitive;500-1500: moderately competitive;above 1500: highly concentrated. 
D) below 1000: highly competitive;1000-1800: moderately competitive;above 1800: highly concentrated. 
E) below 1500: highly competitive;1500-2000: moderately competitive;above 2000: highly concentrated.

Question 4

Social regulation means that the government dictates the price that a firm must charge and/or the quantity that a firm must supply.

Accepted Answer

A) True 
 B)False

Question 5

If a market becomes deregulated and is forced to change from monopoly to competition, the monopolist may be stuck with costly assets for which no returns are possible.These assets are known as:

Accepted Answer

A) monopoly assets. 
B) market assets. 
C) non-returnable assets. 
D) stranded assets. 
E) sunk assets. 
A) monopoly assets. 
B) market assets. 
C) non-returnable assets. 
D) stranded assets. 
E) sunk assets.

Question 6

A Herfindahl index value of 20 for a particular industry indicates that the industry is most likely to be:

Accepted Answer

A) perfectly competitive. 
B) highly concentrated. 
C) oligopolistic. 
D) monopolistic. 
E) made up of illegal firms. 
A) perfectly competitive. 
B) highly concentrated. 
C) oligopolistic. 
D) monopolistic. 
E) made up of illegal firms.

Question 7

The three phases of antitrust policy in the United States since 1890 are:

Accepted Answer

A) 1890 to 1914, the rule of reason;1914 to the early 1980s, per se;since then, the rule of reason. 
B) 1890 to 1914, per se;1914 to the early 1980s, the rule of reason;since then, per se. 
C) 1890 to 1914, the rule of reason;1914 to the early 1980s, per se;since then, no antitrust policy. 
D) 1890 to 1914, the rule of reason;1914 to the early 1980s, per se;since then, a period of rate of return regulation. 
E) 1890 to 1914, the rule of reason;1914 to the early 1980s, per se;since then, a period of nationalization. 
A) 1890 to 1914, the rule of reason;1914 to the early 1980s, per se;since then, the rule of reason. 
B) 1890 to 1914, per se;1914 to the early 1980s, the rule of reason;since then, per se. 
C) 1890 to 1914, the rule of reason;1914 to the early 1980s, per se;since then, no antitrust policy. 
D) 1890 to 1914, the rule of reason;1914 to the early 1980s, per se;since then, a period of rate of return regulation. 
E) 1890 to 1914, the rule of reason;1914 to the early 1980s, per se;since then, a period of nationalization.

Question 8

Which of the following is true of the per se rule?

Accepted Answer

A) The per se rule was used by U.S.courts from 1914 until the 1920s. 
B) The per se rule had the effect of making antitrust policy more liberal. 
C) According to the per se rule, activities that were potentially monopolizing tactics were illegal. 
D) The per se rule did not allow the mere existence of anticompetitive activities to be sufficient evidence for a guilty verdict. 
E) The per se rule was revived by Bush administration. 
A) The per se rule was used by U.S.courts from 1914 until the 1920s. 
B) The per se rule had the effect of making antitrust policy more liberal. 
C) According to the per se rule, activities that were potentially monopolizing tactics were illegal. 
D) The per se rule did not allow the mere existence of anticompetitive activities to be sufficient evidence for a guilty verdict. 
E) The per se rule was revived by Bush administration.

Question 9

Which of the following statements is true of price fixing?

Accepted Answer

A) It represents a high level of competition in an industry. 
B) It is allowed only under the provisions of the Federal Trade Commission Act. 
C) It is, by definition, illegal, as there is no justification for it. 
D) It occurs only in monopolistically competitive industries. 
E) It is legal in United States. 
A) It represents a high level of competition in an industry. 
B) It is allowed only under the provisions of the Federal Trade Commission Act. 
C) It is, by definition, illegal, as there is no justification for it. 
D) It occurs only in monopolistically competitive industries. 
E) It is legal in United States.

Question 10

In the following figure, the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation. Figure 26.2   In the figure,
D: Demand curve for automobiles
S1: Supply curve of automobiles prior to regulation
S2: Supply curve of automobiles after regulation
FG: Clean up cost per unit
Refer to Figure 26.2.The regulation will benefit the society if:

Accepted Answer

A) area BAJ > area 0FIQ2. 
B) area AECJ > area IGQ1Q2. 
C) area IGQ1Q2 > area AECJ. 
D) area BAJ > BAC. 
E) area 0FIQ2 > area BAJ. 
A) area BAJ > area 0FIQ2. 
B) area AECJ > area IGQ1Q2. 
C) area IGQ1Q2 > area AECJ. 
D) area BAJ > BAC. 
E) area 0FIQ2 > area BAJ.

Question 11

Why was trucking deregulated in the U.S.in the 1980s?

Accepted Answer

A) There was an acute shortage of trucks. 
B) The truckers were making huge profits. 
C) A significant percent of all truck-miles were logged by empty trucks. 
D) The truckers were engaged in black marketing. 
E) The rates charged by the truckers were exorbitantly high. 
A) There was an acute shortage of trucks. 
B) The truckers were making huge profits. 
C) A significant percent of all truck-miles were logged by empty trucks. 
D) The truckers were engaged in black marketing. 
E) The rates charged by the truckers were exorbitantly high.

Question 12

Although the GATT was supported by most of the countries of the world, yet global trade shrank during the close of the last decade.This was due to:

Accepted Answer

A) growing suspicion among the nations of the world. 
B) hyperinflation in the major economies of the world. 
C) the recession which began in 2007. 
D) political turmoil in the Asian countries. 
E) the desire among the major players to dominate the international market. 
A) growing suspicion among the nations of the world. 
B) hyperinflation in the major economies of the world. 
C) the recession which began in 2007. 
D) political turmoil in the Asian countries. 
E) the desire among the major players to dominate the international market.

Question 13

Consider an oligopoly that has two firms, one with a 75 percent market share and the other with a 25 percent market share.The Herfindahl index for this market is:

Accepted Answer

A) 5, 625 
B) 6, 250 
C) 625 
D) 5, 000 
E) 8, 500 
A) 5, 625 
B) 6, 250 
C) 625 
D) 5, 000 
E) 8, 500

Question 14

Which of the following is most likely to happen if the Federal Trade Commission (FTC)wins a suit against alleged violators of antitrust law?

Accepted Answer

A) The FTC will receive compensation up to three times the damage caused. 
B) The FTC will not be able to impose substantial penalties. 
C) The FTC will force firms to break up through dissolution. 
D) The FTC will force firms to merge together. 
E) The FTC will file criminal actions that may result in fines but not prison sentences. 
A) The FTC will receive compensation up to three times the damage caused. 
B) The FTC will not be able to impose substantial penalties. 
C) The FTC will force firms to break up through dissolution. 
D) The FTC will force firms to merge together. 
E) The FTC will file criminal actions that may result in fines but not prison sentences.

Question 15

Why do the regulated companies oppose deregulation?

Accepted Answer

A) They are thrown out of the market. 
B) They are deprived of their rights to continue business. 
C) They are denied every kind of support from the government. 
D) They would incur losses on account of increased competition. 
E) They would become unpopular as no longer they would be controlled by the government. 
A) They are thrown out of the market. 
B) They are deprived of their rights to continue business. 
C) They are denied every kind of support from the government. 
D) They would incur losses on account of increased competition. 
E) They would become unpopular as no longer they would be controlled by the government.

Question 16

If a market is narrowly defined, the market share of each firm declines than if it is broadly defined.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following isnot a component of the index which measures economic freedom of a country?

Accepted Answer

A) Monetary freedom 
B) Cultural freedom 
C) Government size 
D) Freedom from corruption 
E) Labor freedom 
A) Monetary freedom 
B) Cultural freedom 
C) Government size 
D) Freedom from corruption 
E) Labor freedom

Question 18

A country is likely to have investment freedom if the government allows free flow of foreign capital into the domestic economy.

Accepted Answer

A) True 
 B)False

Question 19

If social regulation causes the supply curve in a market to shift up because of higher marginal costs, then:

Accepted Answer

A) both consumer and producer surplus will decrease. 
B) both producer and consumer surplus will increase. 
C) consumers will gain at the expense of producers. 
D) producers will gain at the expense of consumers. 
E) there will be no change in the sum of producer and consumer surplus, although its division may change. 
A) both consumer and producer surplus will decrease. 
B) both producer and consumer surplus will increase. 
C) consumers will gain at the expense of producers. 
D) producers will gain at the expense of consumers. 
E) there will be no change in the sum of producer and consumer surplus, although its division may change.

Question 20

Antitrust policies are a set of measures which are taken to liberate the economy from unnecessary governmental controls.

Accepted Answer

A) True 
 B)False

Exam 47: Antitrust and Regulation

Which of the following are the three laws that define the U.S government's approach to antitrust?

The first phase of antitrust policy in the U.S.began with the passage of the Sherman Antitrust Act in 1890.To judge a firm's action, the courts in this period used:

The Justice Department of the U.S.classifies the industries on the basis of the Herfindahl index as:

Social regulation means that the government dictates the price that a firm must charge and/or the quantity that a firm must supply.

If a market becomes deregulated and is forced to change from monopoly to competition, the monopolist may be stuck with costly assets for which no returns are possible.These assets are known as:

A Herfindahl index value of 20 for a particular industry indicates that the industry is most likely to be:

The three phases of antitrust policy in the United States since 1890 are:

Which of the following is true of the per se rule?

Which of the following statements is true of price fixing?

Why was trucking deregulated in the U.S.in the 1980s?

Although the GATT was supported by most of the countries of the world, yet global trade shrank during the close of the last decade.This was due to:

Consider an oligopoly that has two firms, one with a 75 percent market share and the other with a 25 percent market share.The Herfindahl index for this market is:

Which of the following is most likely to happen if the Federal Trade Commission (FTC)wins a suit against alleged violators of antitrust law?

Why do the regulated companies oppose deregulation?

If a market is narrowly defined, the market share of each firm declines than if it is broadly defined.

Which of the following isnot a component of the index which measures economic freedom of a country?

A country is likely to have investment freedom if the government allows free flow of foreign capital into the domestic economy.

If social regulation causes the supply curve in a market to shift up because of higher marginal costs, then:

Antitrust policies are a set of measures which are taken to liberate the economy from unnecessary governmental controls.

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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