Question 1

Most natural monopolies are regulated at some level by government because:

Accepted Answer

A) an unregulated natural monopolist would produce an inefficiently low level of output. 
B) an unregulated natural monopolist would produce only for government bureaucrats. 
C) an unregulated natural monopolist would charge an inefficiently low price in the market. 
D) an unregulated natural monopolist would charge an inefficiently high price in the market. 
E) an unregulated natural monopolist would produce a large quantity at a high price. 
A) an unregulated natural monopolist would produce an inefficiently low level of output. 
B) an unregulated natural monopolist would produce only for government bureaucrats. 
C) an unregulated natural monopolist would charge an inefficiently low price in the market. 
D) an unregulated natural monopolist would charge an inefficiently high price in the market. 
E) an unregulated natural monopolist would produce a large quantity at a high price.

Question 2

Which of the following laws was enacted to forbid monopolization and attempts to monopolize?

Accepted Answer

A) The Anti-Monopoly Act 
B) The Sherman Antitrust Act 
C) The Clayton Antitrust Act 
D) The Federal Trade Commission Act 
E) The Celler-Kefauver Act 
A) The Anti-Monopoly Act 
B) The Sherman Antitrust Act 
C) The Clayton Antitrust Act 
D) The Federal Trade Commission Act 
E) The Celler-Kefauver Act

Question 3

A market is said to be concentrated when:

Accepted Answer

A) the degree of competition in the market increases. 
B) many firms supply to a small number of consumers. 
C) the firms producing identical goods are clustered in a particular location. 
D) a firm or a few firms are able to dictate the competitive conditions in a market. 
E) there is a huge immigration of workers from neighboring areas. 
A) the degree of competition in the market increases. 
B) many firms supply to a small number of consumers. 
C) the firms producing identical goods are clustered in a particular location. 
D) a firm or a few firms are able to dictate the competitive conditions in a market. 
E) there is a huge immigration of workers from neighboring areas.

Question 4

Privatization occurs when a state owned firm is transferred to private ownership.

Accepted Answer

A) True 
 B)False

Question 5

Under George W.Bush's administration, antitrust policy:

Accepted Answer

A) became much more strict. 
B) prohibited every merger attempts. 
C) focused increasingly on environmental concerns. 
D) became more relaxed. 
E) ignored financial regulation and corporate scandals. 
A) became much more strict. 
B) prohibited every merger attempts. 
C) focused increasingly on environmental concerns. 
D) became more relaxed. 
E) ignored financial regulation and corporate scandals.

Question 6

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 7

One necessary step in demonstrating monopolistic behavior is to define the market.In this process defendants would:

Accepted Answer

A) claim that the market was not in equilibrium. 
B) want the market defined as narrowly as possible. 
C) deny that a market existed. 
D) assert that the market was not stable. 
E) want the market defined as broadly as possible. 
A) claim that the market was not in equilibrium. 
B) want the market defined as narrowly as possible. 
C) deny that a market existed. 
D) assert that the market was not stable. 
E) want the market defined as broadly as possible.

Question 8

An example of the opportunity costs involved with social regulation would be:

Accepted Answer

A) the monetary costs of hiring administrative assistants to fill out OSHA safety reports. 
B) the environmental costs of pollution control required under the Clean Air Act. 
C) the monetary costs of laboratory trials required to try out a new drug. 
D) the lives that are lost because new drugs are not introduced quickly enough. 
E) the monetary cost of manufacturing a life saving drug. 
A) the monetary costs of hiring administrative assistants to fill out OSHA safety reports. 
B) the environmental costs of pollution control required under the Clean Air Act. 
C) the monetary costs of laboratory trials required to try out a new drug. 
D) the lives that are lost because new drugs are not introduced quickly enough. 
E) the monetary cost of manufacturing a life saving drug.

Question 9

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 10

Which of the following entities is able to sue a firm for alleged antitrust misbehavior in the U.S.?

Accepted Answer

A) Department of Illegal Affairs 
B) Department of State 
C) Department of Homeland Security 
D) Department of Justice 
E) Department of Labor 
A) Department of Illegal Affairs 
B) Department of State 
C) Department of Homeland Security 
D) Department of Justice 
E) Department of Labor

Question 11

Bills introduced in the United States in 2009 reduced overall trade between America and the rest of the world.

Accepted Answer

A) True 
 B)False

Question 12

The most reliable measure of market concentration is:

Accepted Answer

A) the Cost of Living index. 
B) the Herfindahl index. 
C) the Market index. 
D) the Market-Value weighted index. 
E) the Wholesale Price index. 
A) the Cost of Living index. 
B) the Herfindahl index. 
C) the Market index. 
D) the Market-Value weighted index. 
E) the Wholesale Price index.

Question 13

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 12.1   In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
Refer to Figure 12.1.The natural monopolist will charge a price equal to:

Accepted Answer

A) P4. 
B) P3. 
C) P2. 
D) P1. 
E) P5. 
A) P4. 
B) P3. 
C) P2. 
D) P1. 
E) P5.

Question 14

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 12.1   In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
Refer to Figure 12.1.Identify the fair-rate-of-return price.

Accepted Answer

A) P5 
B) P2 
C) P4 
D) P1 
E) P3 
A) P5 
B) P2 
C) P4 
D) P1 
E) P3

Question 15

Which of the following is true ofthe General Agreement on Tariffs and Trade (GATT)?

Accepted Answer

A) It is now called the World Agreement on Trade and Tariffs. 
B) It was the global trade agreement that did away with the gold standard. 
C) It was a United States' policy to raise tariffs on imported sugar. 
D) It was the first global trade agreement that followed World War II. 
E) It was a global trade agreement to raise tariffs. 
A) It is now called the World Agreement on Trade and Tariffs. 
B) It was the global trade agreement that did away with the gold standard. 
C) It was a United States' policy to raise tariffs on imported sugar. 
D) It was the first global trade agreement that followed World War II. 
E) It was a global trade agreement to raise tariffs.

Question 16

Delegates from different countries of the world met at Geneva in April 1947 which resulted in the formation of the first global trade agreement.Its main objective was:

Accepted Answer

A) to create multiple trade barriers in the member countries. 
B) to enable the member countries to maintain their autarkic conditions. 
C) to provide security to the domestic producers of the member countries by prohibiting international trade. 
D) to create an atmosphere of economic rivalry in the international sphere. 
E) to liberalize trade for mutual prosperity of the members. 
A) to create multiple trade barriers in the member countries. 
B) to enable the member countries to maintain their autarkic conditions. 
C) to provide security to the domestic producers of the member countries by prohibiting international trade. 
D) to create an atmosphere of economic rivalry in the international sphere. 
E) to liberalize trade for mutual prosperity of the members.

Question 17

In an antitrust lawsuit, which of the following parties is entitled to receive treble damages?

Accepted Answer

A) The Antitrust Division of the Justice Department 
B) The Federal Trade Commission 
C) Private plaintiffs 
D) Defendants 
E) The Department of Labor 
A) The Antitrust Division of the Justice Department 
B) The Federal Trade Commission 
C) Private plaintiffs 
D) Defendants 
E) The Department of Labor

Question 18

The "buy American" restriction introduced in the U.S.in 2009 required:

Accepted Answer

A) entities receiving subsidies to invest in American stocks and bonds. 
B) entities receiving subsidies to sell their produce only to American consumers. 
C) entities receiving subsidies to produce only those goods specified by the U.S.government. 
D) entities receiving subsidies to maintain a price for their products as specified by the American government. 
E) entities receiving subsidies to purchase resources from American suppliers. 
A) entities receiving subsidies to invest in American stocks and bonds. 
B) entities receiving subsidies to sell their produce only to American consumers. 
C) entities receiving subsidies to produce only those goods specified by the U.S.government. 
D) entities receiving subsidies to maintain a price for their products as specified by the American government. 
E) entities receiving subsidies to purchase resources from American suppliers.

Question 19

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 20

If there are 50 firms in the industry, and each have an equal market share, the Herfindahl index will be equal to 1, 00, 000.

Accepted Answer

A) True 
 B)False

Exam 19: Antitrust and Regulation

Most natural monopolies are regulated at some level by government because:

Which of the following laws was enacted to forbid monopolization and attempts to monopolize?

A market is said to be concentrated when:

Privatization occurs when a state owned firm is transferred to private ownership.

Under George W.Bush's administration, antitrust policy:

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

One necessary step in demonstrating monopolistic behavior is to define the market.In this process defendants would:

An example of the opportunity costs involved with social regulation would be:

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 entities is able to sue a firm for alleged antitrust misbehavior in the U.S.?

Bills introduced in the United States in 2009 reduced overall trade between America and the rest of the world.

The most reliable measure of market concentration is:

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 12.1 In the figure, D: Demand curve MR: Marginal revenue curve MC: Marginal cost curve ATC: Average total cost curve Refer to Figure 12.1.The natural monopolist will charge a price equal to:

The figure below shows revenue and cost curves of a natural monopoly firm. Figure 12.1 In the figure, D: Demand curve MR: Marginal revenue curve MC: Marginal cost curve ATC: Average total cost curve Refer to Figure 12.1.Identify the fair-rate-of-return price.

Which of the following is true ofthe General Agreement on Tariffs and Trade (GATT)?

Delegates from different countries of the world met at Geneva in April 1947 which resulted in the formation of the first global trade agreement.Its main objective was:

In an antitrust lawsuit, which of the following parties is entitled to receive treble damages?

The "buy American" restriction introduced in the U.S.in 2009 required:

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

If there are 50 firms in the industry, and each have an equal market share, the Herfindahl index will be equal to 1, 00, 000.

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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