Question 1

Monetary freedom refers to:

Accepted Answer

A) the ability to create and operate an enterprise easily. 
B) the absence of tariff and non-tariff barriers that affect imports of goods. 
C) the tax burden and overall tax revenue of the government. 
D) price stability with an assessment of price control. 
E) the free flow of foreign capital. 
A) the ability to create and operate an enterprise easily. 
B) the absence of tariff and non-tariff barriers that affect imports of goods. 
C) the tax burden and overall tax revenue of the government. 
D) price stability with an assessment of price control. 
E) the free flow of foreign capital.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Which of the following practices is notrestricted by the antitrust law in the United States?

Accepted Answer

A) Contracts and conspiracies in restraint of trade 
B) Attempts to monopolize a market 
C) Mergers that substantially lessen competition 
D) Unfair or deceptive acts of competition 
E) All forms of quality discrimination 
A) Contracts and conspiracies in restraint of trade 
B) Attempts to monopolize a market 
C) Mergers that substantially lessen competition 
D) Unfair or deceptive acts of competition 
E) All forms of quality discrimination

Question 4

Under the Clinton administration, attempts were made to relax the antitrust enforcement efforts of the Reagan administration.

Accepted Answer

A) True 
 B)False

Question 5

One difference between economic and social regulation is that economic regulation usually pertains to a specific industry, whereas social regulation applies most if not all industries.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following calculations is necessary to determine whether a regulation should be implemented?

Accepted Answer

A) Marginal cost-marginal revenue calculations 
B) Cost effectiveness calculations 
C) Total cost-total revenue calculations 
D) Cost minimization calculations 
E) Cost-benefit calculations 
A) Marginal cost-marginal revenue calculations 
B) Cost effectiveness calculations 
C) Total cost-total revenue calculations 
D) Cost minimization calculations 
E) Cost-benefit calculations

Question 7

When examining the costs of regulation to the U.S.economy, economists can safely ignore the opportunity costs of regulation because they are relatively insignificant compared with the direct costs of regulation.

Accepted Answer

A) True 
 B)False

Question 8

Being a monopoly or attempting to monopolize act as sufficient evidence that lead to a guilty verdict under the rule of reason.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Actions against alleged violators of the antitrust statutes may be initiated by the Justice Department, by the Federal Trade Commission, and by private plaintiffs.

Accepted Answer

A) True 
 B)False

Question 11

A market that is shared equally by 100 firms would have a Herfindahl index of :

Accepted Answer

A) 1. 
B) 1, 000. 
C) 500. 
D) 100. 
E) 50. 
A) 1. 
B) 1, 000. 
C) 500. 
D) 100. 
E) 50.

Question 12

When a monopoly is regulated it is required to sell lower output at a lower price.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Regulation of monopolies is justified on the ground that a monopolist sells too less at a too high price.

Accepted Answer

A) True 
 B)False

Question 15

Any kind of social regulation raises the per unit cost of production of a good and hence leads to a loss of producer and consumer surplus.

Accepted Answer

A) True 
 B)False

Question 16

A regulated natural monopoly is allowed to set a price which will enable it to earn an above-normal profit.

Accepted Answer

A) True 
 B)False

Question 17

A Herfindahl index of 5, 000 would indicate:

Accepted Answer

A) a monopoly. 
B) a duopoly (two firms)with equal shares. 
C) an oligopoly with three firms. 
D) a monopolistically competitive industry. 
E) a perfectly competitive market. 
A) a monopoly. 
B) a duopoly (two firms)with equal shares. 
C) an oligopoly with three firms. 
D) a monopolistically competitive industry. 
E) a perfectly competitive market.

Question 18

In the following figure, the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation. Figure 12.2   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
According to Figure 12.2, the total clean up cost after the regulation is:

Accepted Answer

A) area 0FIQ2. 
B) area 0FGQ1. 
C) area BEC. 
D) area BEP1. 
E) area BEGF. 
A) area 0FIQ2. 
B) area 0FGQ1. 
C) area BEC. 
D) area BEP1. 
E) area BEGF.

Question 19

In the following figure, the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation. Figure 12.2   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
According to Figure 12.2, the total clean up cost for the society prior to regulation is:

Accepted Answer

A) area 0BEQ1. 
B) area 0FIQ2. 
C) area 0FGQ1. 
D) area 0P1EQ1. 
E) area 0CEQ1. 
A) area 0BEQ1. 
B) area 0FIQ2. 
C) area 0FGQ1. 
D) area 0P1EQ1. 
E) area 0CEQ1.

Question 20

Which of the following statements best describes the difference between economic regulation and social regulation?

Accepted Answer

A) Economic regulation has little to do with price and output while social regulation explicitly deals with price and output. 
B) Social regulation is concerned with directly redistributing wealth while economic regulation is concerned with accumulation of wealth. 
C) Economic regulation is concerned with directly redistributing wealth while social regulation is concerned with accumulation of wealth. 
D) Social regulation has historically targeted industries such as railroads and airlines while economic regulation has all the industries under its purview. 
E) Economic regulation deals with price and output , while social regulation deals with health and safety matters that apply across several industries. 
A) Economic regulation has little to do with price and output while social regulation explicitly deals with price and output. 
B) Social regulation is concerned with directly redistributing wealth while economic regulation is concerned with accumulation of wealth. 
C) Economic regulation is concerned with directly redistributing wealth while social regulation is concerned with accumulation of wealth. 
D) Social regulation has historically targeted industries such as railroads and airlines while economic regulation has all the industries under its purview. 
E) Economic regulation deals with price and output , while social regulation deals with health and safety matters that apply across several industries.

Exam 19: Antitrust and Regulation

Monetary freedom refers to:

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

Which of the following practices is notrestricted by the antitrust law in the United States?

Under the Clinton administration, attempts were made to relax the antitrust enforcement efforts of the Reagan administration.

One difference between economic and social regulation is that economic regulation usually pertains to a specific industry, whereas social regulation applies most if not all industries.

Which of the following calculations is necessary to determine whether a regulation should be implemented?

When examining the costs of regulation to the U.S.economy, economists can safely ignore the opportunity costs of regulation because they are relatively insignificant compared with the direct costs of regulation.

Being a monopoly or attempting to monopolize act as sufficient evidence that lead to a guilty verdict under the rule of reason.

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

Actions against alleged violators of the antitrust statutes may be initiated by the Justice Department, by the Federal Trade Commission, and by private plaintiffs.

A market that is shared equally by 100 firms would have a Herfindahl index of :

When a monopoly is regulated it is required to sell lower output at a lower price.

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

Regulation of monopolies is justified on the ground that a monopolist sells too less at a too high price.

Any kind of social regulation raises the per unit cost of production of a good and hence leads to a loss of producer and consumer surplus.

A regulated natural monopoly is allowed to set a price which will enable it to earn an above-normal profit.

A Herfindahl index of 5, 000 would indicate:

Which of the following statements best describes the difference between economic regulation and social regulation?

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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