Question 1

For the world as a whole, economic freedom increased since 1994 as the countries opened up in the world market and the governments slashed tax rates.

Accepted Answer

A) True 
 B)False

Question 2

In a natural monopoly, government regulation is often used to ensure more beneficial price and output combinations for consumers in the market than would exist in the absence of regulation.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true of Antitrust policy?

Accepted Answer

A) Antitrust policy prohibits agreements that allow free trade. 
B) Antitrust policy restricts abusive behavior by a firm dominating a market. 
C) Antitrust policy allows anti-competitive practices. 
D) Antitrust policy encourages establishment of monopoly firms. 
E) Antitrust policy creates trade barriers like tariffs and quota. 
A) Antitrust policy prohibits agreements that allow free trade. 
B) Antitrust policy restricts abusive behavior by a firm dominating a market. 
C) Antitrust policy allows anti-competitive practices. 
D) Antitrust policy encourages establishment of monopoly firms. 
E) Antitrust policy creates trade barriers like tariffs and quota.

Question 4

Economic freedom refers to the freedom of the government to control resources and labor in a country.

Accepted Answer

A) True 
 B)False

Question 5

When regulating a natural monopoly, government officials face a dilemma that:

Accepted Answer

A) the efficient price may not allow the firm to break even. 
B) the efficient price may lead to an inefficiently high level of output. 
C) the efficient price leads to an output level that is too low. 
D) the efficient price may not allow the firm to enjoy positive profits. 
E) long-run average costs are constantly increasing. 
A) the efficient price may not allow the firm to break even. 
B) the efficient price may lead to an inefficiently high level of output. 
C) the efficient price leads to an output level that is too low. 
D) the efficient price may not allow the firm to enjoy positive profits. 
E) long-run average costs are constantly increasing.

Question 6

Antitrust policy is used to describe government policies and programs that are designed to:

Accepted Answer

A) promote the creation of trusts, or combinations of independent firms. 
B) control the growth of monopoly and enhance competition. 
C) deal with the threat of competitive practices to public interests. 
D) create an environment in which the government will distrust firms. 
E) create an environment in which firms will distrust the government. 
A) promote the creation of trusts, or combinations of independent firms. 
B) control the growth of monopoly and enhance competition. 
C) deal with the threat of competitive practices to public interests. 
D) create an environment in which the government will distrust firms. 
E) create an environment in which firms will distrust the government.

Question 7

Under the second phase of antitrust policy that began in 1914 in the U.S. , the courts used _____ in order to judge the firms' actions.

Accepted Answer

A) a rule of reason 
B) the rule of 72 
C) a rule of thirds 
D) a per se rule 
E) the rule of law 
A) a rule of reason 
B) the rule of 72 
C) a rule of thirds 
D) a per se rule 
E) the rule of law

Question 8

According to the Index of Economic Freedom, which of the following is the freest economy in the world?

Accepted Answer

A) Cuba 
B) Zimbabwe 
C) Hong Kong 
D) North Korea 
E) Libya 
A) Cuba 
B) Zimbabwe 
C) Hong Kong 
D) North Korea 
E) Libya

Question 9

According to the per se rule, activities that were potentially monopolizing tactics were illegal.

Accepted Answer

A) True 
 B)False

Question 10

The Social Security tax structure in the United States is regressive in nature.

Accepted Answer

A) True 
 B)False

Question 11

The judicial doctrine, being a monopoly or attempting to monopolize is not in itself illegal;to be illegal, an action had to be shown to have negative economic effects, is called:

Accepted Answer

A) the "big is bad" policy. 
B) the per se rule. 
C) predatory price-cutting policy. 
D) the rule of law. 
E) the rule of reason. 
A) the "big is bad" policy. 
B) the per se rule. 
C) predatory price-cutting policy. 
D) the rule of law. 
E) the rule of reason.

Question 12

Sherman Antitrust Act bans price discrimination that substantially lessens competition or injures particular competitors.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following does the Sherman Antitrust Act forbid?

Accepted Answer

A) Monopolization or attempts to monopolize 
B) All types of price discrimination 
C) Unfair or deceptive acts 
D) Unfair methods of competition 
E) Practices that might keep other firms from entering into an industry 
A) Monopolization or attempts to monopolize 
B) All types of price discrimination 
C) Unfair or deceptive acts 
D) Unfair methods of competition 
E) Practices that might keep other firms from entering into an industry

Question 14

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 15

Which of the following practices is restricted by the antitrust laws of the United States?

Accepted Answer

A) Merger of smaller firms into a large firm 
B) Entry of new firms in the long run 
C) Standardization of products in a market 
D) Exit of non-performing firms in the long run 
E) Quality differentiation by competitive firms 
A) Merger of smaller firms into a large firm 
B) Entry of new firms in the long run 
C) Standardization of products in a market 
D) Exit of non-performing firms in the long run 
E) Quality differentiation by competitive firms

Question 16

To avoid driving a natural monopolist into bankruptcy, regulatory commissions:

Accepted Answer

A) allow the monopolist to enjoy an economic profit. 
B) do not allow the monopolist to make an accounting profit. 
C) subsidize the monopolist to help it break even. 
D) allow the monopolist to earn a fair rate of return. 
E) allow the monopolist to temporarily shut down. 
A) allow the monopolist to enjoy an economic profit. 
B) do not allow the monopolist to make an accounting profit. 
C) subsidize the monopolist to help it break even. 
D) allow the monopolist to earn a fair rate of return. 
E) allow the monopolist to temporarily shut down.

Question 17

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 18

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 19

Under the License Raj system in India:

Accepted Answer

A) the producers having the licence could produce as much as they wanted. 
B) the producers were allowed to manufacture goods only for the government. 
C) only the producers having the licence were allowed to import inputs from abroad. 
D) producing beyond the specified limit was a punishable offence. 
E) the producers could only produce to meet their subsistence needs. 
A) the producers having the licence could produce as much as they wanted. 
B) the producers were allowed to manufacture goods only for the government. 
C) only the producers having the licence were allowed to import inputs from abroad. 
D) producing beyond the specified limit was a punishable offence. 
E) the producers could only produce to meet their subsistence needs.

Question 20

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.

Exam 19: Antitrust and Regulation

For the world as a whole, economic freedom increased since 1994 as the countries opened up in the world market and the governments slashed tax rates.

In a natural monopoly, government regulation is often used to ensure more beneficial price and output combinations for consumers in the market than would exist in the absence of regulation.

Which of the following is true of Antitrust policy?

Economic freedom refers to the freedom of the government to control resources and labor in a country.

When regulating a natural monopoly, government officials face a dilemma that:

Antitrust policy is used to describe government policies and programs that are designed to:

Under the second phase of antitrust policy that began in 1914 in the U.S. , the courts used _____ in order to judge the firms' actions.

According to the Index of Economic Freedom, which of the following is the freest economy in the world?

According to the per se rule, activities that were potentially monopolizing tactics were illegal.

The Social Security tax structure in the United States is regressive in nature.

The judicial doctrine, being a monopoly or attempting to monopolize is not in itself illegal;to be illegal, an action had to be shown to have negative economic effects, is called:

Sherman Antitrust Act bans price discrimination that substantially lessens competition or injures particular competitors.

Which of the following does the Sherman Antitrust Act forbid?

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:

Which of the following practices is restricted by the antitrust laws of the United States?

To avoid driving a natural monopolist into bankruptcy, regulatory commissions:

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

Which of the following statements is true of price fixing?

Under the License Raj system in India:

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

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

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

Antitrust and Regulation

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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