Question 1

The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will

Accepted Answer

A)  contravene antitrust regulations. 
B)  lead to attracting more customers. 
C)  let them produce more efficiently. 
D)  the right answer is both b and c. 
A)  contravene antitrust regulations. 
B)  lead to attracting more customers. 
C)  let them produce more efficiently. 
D)  the right answer is both b and c.

Question 2

The term _______ refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow.

Accepted Answer

A)  regulatory tie-in 
B)  deregulation 
C)  privatization 
D)  regulatory capture 
A)  regulatory tie-in 
B)  deregulation 
C)  privatization 
D)  regulatory capture

Question 3

There have been two especially important shifts in how markets are defined in recent decades: one involves _______ and the other involves _______.

Accepted Answer

A)  technology; globalization 
B)  the Internet; technology 
C)  communication technologies; the Internet 
D)  globalization; communication technologies 
A)  technology; globalization 
B)  the Internet; technology 
C)  communication technologies; the Internet 
D)  globalization; communication technologies

Question 4

Briefly compare and contrast cost-plus regulation and price cap regulation.

Accepted Answer

Cost-plus regulation refers to governmen

Question 5

Briefly explain regulation in the case of a natural monopoly. Provide 3 common examples of regulation. Briefly discuss the benefits of privatization set out in the text and explain what is required for privatization of a nationalized asset in order for privatization to work well.

Accepted Answer

In case of a natural monopoly, market c

Question 6

Which of the following is a true statement?

Accepted Answer

A)  The government approves most proposed mergers. 
B)  Government regulators agree that few mergers are beneficial to consumers. 
C)  Government regulators agree that all mergers are beneficial to consumers. 
D)  The government disapproves most proposed mergers. 
A)  The government approves most proposed mergers. 
B)  Government regulators agree that few mergers are beneficial to consumers. 
C)  Government regulators agree that all mergers are beneficial to consumers. 
D)  The government disapproves most proposed mergers.

Question 7

Currently, the approach to antitrust regulation involves

Accepted Answer

A)  defining a market and counting up total sales. 
B)  market concentration ratio. 
C)  HHI and concentration ratio. 
D)  detailed analysis of specific markets and companies. 
A)  defining a market and counting up total sales. 
B)  market concentration ratio. 
C)  HHI and concentration ratio. 
D)  detailed analysis of specific markets and companies.

Question 8

Why would regulators find that a proposed merger is likely to lessen competition?

Accepted Answer

A)  it can lead to lower prices 
B)  it can increase availability of goods 
C)  it can enhance innovation 
D)  it can lead to lower quality products 
A)  it can lead to lower prices 
B)  it can increase availability of goods 
C)  it can enhance innovation 
D)  it can lead to lower quality products

Question 9

The four-firm _______ measures the percentage share of the total sales in the Industry that is accounted for by the largest four firms.

Accepted Answer

A)  coordination ratio 
B)  market share ratio 
C)  concentration ratio 
D)  production ratio 
A)  coordination ratio 
B)  market share ratio 
C)  concentration ratio 
D)  production ratio

Question 10

In the 1980s, the FTC followed guidelines stipulating that, should a proposed merger result in an HHI of less than 1,000,

Accepted Answer

A)  the FTC would probably challenge it. 
B)  the FTC would scrutinize the proposal. 
C)  the FTC would probably approve it. 
D)  the FTC make a case-by-case decision. 
A)  the FTC would probably challenge it. 
B)  the FTC would scrutinize the proposal. 
C)  the FTC would probably approve it. 
D)  the FTC make a case-by-case decision.

Question 11

The term _______ refers to the percentage share of a firm's total sales in the market.

Accepted Answer

A)  market share 
B)  concentration ratio 
C)  total market ratio 
D)  market cap 
A)  market share 
B)  concentration ratio 
C)  total market ratio 
D)  market cap

Question 12

What is the maximum value that can be reached using the HHI?

Accepted Answer

A)  100 
B)  1,000 
C)  10,000 
D)  100,000 
A)  100 
B)  1,000 
C)  10,000 
D)  100,000

Question 13

Antitrust laws were created to give government the power to

Accepted Answer

A)  block certain mergers and break up large firms into smaller ones. 
B)  block cartels, and break up regulatory capture. 
C)  force the firm to sell off the profitable parts of its operation. 
D)  block certain mergers that are determined to be uncompetitive. 
A)  block certain mergers and break up large firms into smaller ones. 
B)  block cartels, and break up regulatory capture. 
C)  force the firm to sell off the profitable parts of its operation. 
D)  block certain mergers that are determined to be uncompetitive.

Question 14

A business _______ occurs when, for practical purposes, one firm purchases another.

Accepted Answer

A)  merger 
B)  loss 
C)  acquisition 
D)  antitrust violation 
A)  merger 
B)  loss 
C)  acquisition 
D)  antitrust violation

Question 15

What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair?

Accepted Answer

A)  Department of Justice 
B)  Antitrust Act 
C)  Federal Trade Commission 
D)  Supreme Court 
A)  Department of Justice 
B)  Antitrust Act 
C)  Federal Trade Commission 
D)  Supreme Court

Question 16

When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing

Accepted Answer

A)  deregulation. 
B)  price cap regulation. 
C)  cost-plus regulation 
D)  regulatory capture rules. 
A)  deregulation. 
B)  price cap regulation. 
C)  cost-plus regulation 
D)  regulatory capture rules.

Question 17

City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below.
 
If the government decides to regulate this natural monopoly by forcing them to produce at the point where the demand curve intersects marginal cost, then the firm will make a _______ and _______ continue in the long run.

Accepted Answer

A)  loss of $24 million, will not 
B)  loss of $33 million, will not 
C)  profit of $33 million, will 
D)  profit of $24 million, will 
A)  loss of $24 million, will not 
B)  loss of $33 million, will not 
C)  profit of $33 million, will 
D)  profit of $24 million, will

Question 18

Firms operating under cost-plus regulation have an incentive to generate high costs by building huge factories or employing lots of staff,

Accepted Answer

A)  because doing so creates efficiencies and innovation. 
B)  because the market changes dramatically and they have incentive to meet new demand. 
C)  because this will reduce the firm's costs more quickly and it can make a high level of profit. 
D)  because what they can charge is linked to the costs they incur. 
A)  because doing so creates efficiencies and innovation. 
B)  because the market changes dramatically and they have incentive to meet new demand. 
C)  because this will reduce the firm's costs more quickly and it can make a high level of profit. 
D)  because what they can charge is linked to the costs they incur.

Question 19

Following the commencement of deregulation of US airline industry in the 1970s, reduced airfares saved consumers billions of dollar a year however, the more recent string of airline mergers has

Accepted Answer

A)  government safety regulators increasing employment opportunities for safety inspectors every year. 
B)  doubled the number of high-paying jobs in the airline industry year after year. 
C)  raised new concerns over how competition in the industry can once again be strengthened. 
D)  encouraged deregulators to push further and consider industries where deregulation needs are not obvious. 
A)  government safety regulators increasing employment opportunities for safety inspectors every year. 
B)  doubled the number of high-paying jobs in the airline industry year after year. 
C)  raised new concerns over how competition in the industry can once again be strengthened. 
D)  encouraged deregulators to push further and consider industries where deregulation needs are not obvious.

Question 20

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers?

Accepted Answer

A)  merged firms generally are as efficient and innovative as they can be 
B)  consumers will have greater access to lower priced goods and services 
C)  merged firms can increase price and maintain permanently higher profits 
D)  merged firms are better positioned to take advantage of economies of scale 
A)  merged firms generally are as efficient and innovative as they can be 
B)  consumers will have greater access to lower priced goods and services 
C)  merged firms can increase price and maintain permanently higher profits 
D)  merged firms are better positioned to take advantage of economies of scale

The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will

The term _______ refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow.

There have been two especially important shifts in how markets are defined in recent decades: one involves _ and the other involves _.

Briefly compare and contrast cost-plus regulation and price cap regulation.

Briefly explain regulation in the case of a natural monopoly. Provide 3 common examples of regulation. Briefly discuss the benefits of privatization set out in the text and explain what is required for privatization of a nationalized asset in order for privatization to work well.

Which of the following is a true statement?

Currently, the approach to antitrust regulation involves

Why would regulators find that a proposed merger is likely to lessen competition?

The four-firm _______ measures the percentage share of the total sales in the Industry that is accounted for by the largest four firms.

In the 1980s, the FTC followed guidelines stipulating that, should a proposed merger result in an HHI of less than 1,000,

The term _______ refers to the percentage share of a firm's total sales in the market.

What is the maximum value that can be reached using the HHI?

Antitrust laws were created to give government the power to

A business _______ occurs when, for practical purposes, one firm purchases another.

What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair?

When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing

Firms operating under cost-plus regulation have an incentive to generate high costs by building huge factories or employing lots of staff,

Following the commencement of deregulation of US airline industry in the 1970s, reduced airfares saved consumers billions of dollar a year however, the more recent string of airline mergers has

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers?

Welcome to Economics

Choice in a World of Scarcity

Demand and Supply

Labor and Financial Markets

Elasticity

Consumer Choices

Cost and Industry Structure

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Environmental Protection and Negative Externalities

Positive Externalities and Public Goods

Poverty and Economic Inequality

Issues in Labor Markets: Unions, Discrimination, Immigration

Information, Risk, and Insurance

Financial Markets

Public Economy

International Trade

Globalization and Protectionism

Filters

Exam 11: Monopoly and Antitrust Policy

The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will

The term _______ refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow.

There have been two especially important shifts in how markets are defined in recent decades: one involves _______ and the other involves _______.

Briefly compare and contrast cost-plus regulation and price cap regulation.

Briefly explain regulation in the case of a natural monopoly. Provide 3 common examples of regulation. Briefly discuss the benefits of privatization set out in the text and explain what is required for privatization of a nationalized asset in order for privatization to work well.

Which of the following is a true statement?

Currently, the approach to antitrust regulation involves

Why would regulators find that a proposed merger is likely to lessen competition?

The four-firm _______ measures the percentage share of the total sales in the Industry that is accounted for by the largest four firms.

In the 1980s, the FTC followed guidelines stipulating that, should a proposed merger result in an HHI of less than 1,000,

The term _______ refers to the percentage share of a firm's total sales in the market.

What is the maximum value that can be reached using the HHI?

Antitrust laws were created to give government the power to

A business _______ occurs when, for practical purposes, one firm purchases another.

What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair?

When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing

Firms operating under cost-plus regulation have an incentive to generate high costs by building huge factories or employing lots of staff,

Following the commencement of deregulation of US airline industry in the 1970s, reduced airfares saved consumers billions of dollar a year however, the more recent string of airline mergers has

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers?

Welcome to Economics

Choice in a World of Scarcity

Demand and Supply

Labor and Financial Markets

Elasticity

Consumer Choices

Cost and Industry Structure

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Environmental Protection and Negative Externalities

Positive Externalities and Public Goods

Poverty and Economic Inequality

Issues in Labor Markets: Unions, Discrimination, Immigration

Information, Risk, and Insurance

Financial Markets

Public Economy

International Trade

Globalization and Protectionism

Filters

There have been two especially important shifts in how markets are defined in recent decades: one involves _ and the other involves _.