Question 1

If ball-bearing producers support proposed regulation of their industry, then it is likely that

Accepted Answer

A) ball-bearing prices will decrease under regulation 
B) profits of firms in the ball-bearing industry will decrease after regulation 
C) ball-bearing producers are concerned about the best interests of the public 
D) ball-bearing producers will not attempt to influence the adoption of the regulation 
E) consumers of ball-bearings will suffer from the proposed regulation 
A) ball-bearing prices will decrease under regulation 
B) profits of firms in the ball-bearing industry will decrease after regulation 
C) ball-bearing producers are concerned about the best interests of the public 
D) ball-bearing producers will not attempt to influence the adoption of the regulation 
E) consumers of ball-bearings will suffer from the proposed regulation

Question 2

According to research by William Shepherd, competition has increased in U.S.industries since World War II due to

Accepted Answer

A) both c and d 
B) all of the following 
C) international trade 
D) deregulation 
E) antitrust activity 
A) both c and d 
B) all of the following 
C) international trade 
D) deregulation 
E) antitrust activity

Question 3

What act of Congress declared restraint of trade illegal and declared any attempt at monopolizing unlawful?

Accepted Answer

A) the Celler-Kefauver Anti-Merger Act 
B) the Sherman Antitrust Act 
C) the Clayton Act 
D) the Wheeler-Lea Act 
E) the Clayton-Celler Act 
A) the Celler-Kefauver Anti-Merger Act 
B) the Sherman Antitrust Act 
C) the Clayton Act 
D) the Wheeler-Lea Act 
E) the Clayton-Celler Act

Question 4

If firms accused of antitrust violations sign a consent decree, they have

Accepted Answer

A) admitted guilt and accept the lawful penalties 
B) admitted guilt, but are relieved of any penalties by agreeing to cease the violations 
C) agreed to cease the alleged wrongdoing, without admitting guilt 
D) denied the accusation and requested a formal hearing or trial 
E) denied the accusation and given proof that it is untrue 
A) admitted guilt and accept the lawful penalties 
B) admitted guilt, but are relieved of any penalties by agreeing to cease the violations 
C) agreed to cease the alleged wrongdoing, without admitting guilt 
D) denied the accusation and requested a formal hearing or trial 
E) denied the accusation and given proof that it is untrue

Question 5

As imports rose in 13 major industries studied by Shepherd, these U.S.producers, finding themselves at a cost and quality disadvantage relative to imported goods, initially responded by

Accepted Answer

A) improving technology 
B) exiting the industry 
C) seeking trade barriers 
D) asking that quotas and tariffs be removed 
E) raising prices to recoup their losses 
A) improving technology 
B) exiting the industry 
C) seeking trade barriers 
D) asking that quotas and tariffs be removed 
E) raising prices to recoup their losses

Question 6

The Sherman Act

Accepted Answer

A) created the Federal Trade Commission 
B) established the Department of Justice Guidelines 
C) regulated railroad and trucking industries 
D) outlawed restraints of trade 
E) forbade price discrimination 
A) created the Federal Trade Commission 
B) established the Department of Justice Guidelines 
C) regulated railroad and trucking industries 
D) outlawed restraints of trade 
E) forbade price discrimination

Question 7

The increase in competition in the United States between 1958 and 1988 was not a result of

Accepted Answer

A) increased imports 
B) deregulation 
C) antitrust activity 
D) penetration of markets by foreign producers 
E) import quotas 
A) increased imports 
B) deregulation 
C) antitrust activity 
D) penetration of markets by foreign producers 
E) import quotas

Question 8

Under U.S.antitrust law, a consent decree allows a firm to

Accepted Answer

A) admit to an antitrust violation without penalty 
B) admit to an antitrust violation without a lawsuit 
C) challenge the government's accusation in court 
D) cease the alleged wrongdoing without admitting guilt 
E) cease the alleged wrongdoing only by admitting guilt 
A) admit to an antitrust violation without penalty 
B) admit to an antitrust violation without a lawsuit 
C) challenge the government's accusation in court 
D) cease the alleged wrongdoing without admitting guilt 
E) cease the alleged wrongdoing only by admitting guilt

Question 9

A monopoly is likely to charge a higher price than an otherwise similar competitive industry would be.

Accepted Answer

A) True 
 B)False

Question 10

If there are only two firms in an industry, the value of the Herfindahl index must be 5, 000.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a problem with or a limit on antitrust policy?

Accepted Answer

A) Competition may not require that many firms 
B) Abuse of antitrust 
C) Growth of international markets 
D) Growing doubt about the economic value of lengthy antitrust court cases 
E) All of the answers are correct 
A) Competition may not require that many firms 
B) Abuse of antitrust 
C) Growth of international markets 
D) Growing doubt about the economic value of lengthy antitrust court cases 
E) All of the answers are correct

Question 12

In the late nineteenth century, technological improvements and cheaper transportation in the United States led to

Accepted Answer

A) a decrease in minimum efficient scale in many industries 
B) an increase in minimum efficient scale in many industries 
C) an overall reduction in productive efficiency 
D) a narrowing of markets 
E) price increases in many industries 
A) a decrease in minimum efficient scale in many industries 
B) an increase in minimum efficient scale in many industries 
C) an overall reduction in productive efficiency 
D) a narrowing of markets 
E) price increases in many industries

Question 13

Exhibit 15-1   If regulators set price equal to marginal cost for the natural monopoly in Exhibit 15-1, then from the usual profit-maximizing position, price changes from

Accepted Answer

A) $24 to $18, and quantity increases from 5 to 8 
B) $14 to $20, and quantity increases from 5 to 8 
C) $24 to $18, and quantity remains unchanged 
D) $24 to $22, and quantity increases from 5 to 10 
A) $24 to $18, and quantity increases from 5 to 8 
B) $14 to $20, and quantity increases from 5 to 8 
C) $24 to $18, and quantity remains unchanged 
D) $24 to $22, and quantity increases from 5 to 10

Question 14

If an industry consists of only four firms with equal market shares, then the Herfindahl index

Accepted Answer

A) is 25 
B) is 10, 000 
C) is 100 
D) is 2, 500 
E) cannot be calculated without additional information 
A) is 25 
B) is 10, 000 
C) is 100 
D) is 2, 500 
E) cannot be calculated without additional information

Question 15

If an industry currently has a Herfindahl index of 900 and a merger would raise that to 950, then the Department of Justice would generally

Accepted Answer

A) challenge the merger because the index would become too large 
B) challenge the merger because the change in the index is too large 
C) not challenge the merger because the postmerger index is less than 1, 800 
D) not challenge the merger if it is a horizontal merger 
E) challenge the merger if it is a vertical merger 
A) challenge the merger because the index would become too large 
B) challenge the merger because the change in the index is too large 
C) not challenge the merger because the postmerger index is less than 1, 800 
D) not challenge the merger if it is a horizontal merger 
E) challenge the merger if it is a vertical merger

Question 16

The Clayton Act prohibits all horizontal mergers, regardless of their economic consequences.

Accepted Answer

A) True 
 B)False

Question 17

Increased international trade and deregulation have resulted in

Accepted Answer

A) increased competition in the U.S.economy 
B) greater monopolization of industries in the U.S.economy 
C) more oligopolies and cartels in the U.S.economy 
D) greater government intervention in the U.S.economy 
E) no changes in the U.S.economy 
A) increased competition in the U.S.economy 
B) greater monopolization of industries in the U.S.economy 
C) more oligopolies and cartels in the U.S.economy 
D) greater government intervention in the U.S.economy 
E) no changes in the U.S.economy

Question 18

Economic regulation of business is justified if, by intervening, government can

Accepted Answer

A) improve the allocation of resources in society 
B) create economic rents for special interest groups 
C) reduce output and increase prices for an industry 
D) increase tax revenue from the regulated industry 
E) force firms to increase their costs of production 
A) improve the allocation of resources in society 
B) create economic rents for special interest groups 
C) reduce output and increase prices for an industry 
D) increase tax revenue from the regulated industry 
E) force firms to increase their costs of production

Question 19

Which of the following occurs if firms are able to restrict output and raise price?

Accepted Answer

A) resources are misallocated 
B) wealth is shifted from consumers to government 
C) wealth is shifted from producers to consumers 
D) P = MC 
E) P = minimum LRAC 
A) resources are misallocated 
B) wealth is shifted from consumers to government 
C) wealth is shifted from producers to consumers 
D) P = MC 
E) P = minimum LRAC

Question 20

A private firm that sustains a financial loss because of an antitrust violation may be able to recover three times the actual damages.

Accepted Answer

A) True 
 B)False

Exam 15: Economic Regulation and Antitrust Policy

If ball-bearing producers support proposed regulation of their industry, then it is likely that

According to research by William Shepherd, competition has increased in U.S.industries since World War II due to

What act of Congress declared restraint of trade illegal and declared any attempt at monopolizing unlawful?

If firms accused of antitrust violations sign a consent decree, they have

As imports rose in 13 major industries studied by Shepherd, these U.S.producers, finding themselves at a cost and quality disadvantage relative to imported goods, initially responded by

The Sherman Act

The increase in competition in the United States between 1958 and 1988 was not a result of

Under U.S.antitrust law, a consent decree allows a firm to

A monopoly is likely to charge a higher price than an otherwise similar competitive industry would be.

If there are only two firms in an industry, the value of the Herfindahl index must be 5, 000.

Which of the following is a problem with or a limit on antitrust policy?

In the late nineteenth century, technological improvements and cheaper transportation in the United States led to

Exhibit 15-1 If regulators set price equal to marginal cost for the natural monopoly in Exhibit 15-1, then from the usual profit-maximizing position, price changes from

If an industry consists of only four firms with equal market shares, then the Herfindahl index

If an industry currently has a Herfindahl index of 900 and a merger would raise that to 950, then the Department of Justice would generally

The Clayton Act prohibits all horizontal mergers, regardless of their economic consequences.

Increased international trade and deregulation have resulted in

Economic regulation of business is justified if, by intervening, government can

Which of the following occurs if firms are able to restrict output and raise price?

A private firm that sustains a financial loss because of an antitrust violation may be able to recover three times the actual damages.

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters