Exam 14: Limiting Market Power: Antitrust and Regulation

When it is cheaper for one firm to produce a number of different commodities together than it is for a group of small firms to produce those commodities, ____ exist(s).

Cross-subsidization implies that a loss from one product's sales will be made up by the profit from another product's sales.

If an industry consists of five firms each with a 20 percent market share, then the Herfindahl-Hirschman index would equal 1,600.

Which of the following would not occur if all large firms in the economy were broken into smaller firms?

From 1992 to 2012, many industries have increased in concentration.

One economically valid approach to regulation is simply to break all large firms into many smaller ones.

Critics of price regulation suggest that some firms

Regulators often raise prices instead of lowering them.This is designed to

"Cream skimming" usually results in

Which of the following acts prohibited predatory pricing?

Price discrimination by a firm is

Many regulated industries are not pure monopolies.

Beginning in the mid-1970s, Congress deregulated several industries including airlines and trucking.

What is not true if a firm exhibits decreasing average cost as quantity increases?

The antitrust laws are sometimes used by companies to reduce competition in their markets rather than enhance it.

A concentration ratio provides a better assessment of market power than the Herfindahl-Hirschman index does.

By definition, an industry with high concentration also is highly competitive.

An exclusive supply contract is a contract between a firm and its input suppliers that requires the suppliers to sell only to that firm, not anyone else.

What does the Herfindahl-Hirschman Index value near 10,000 imply about the market?

The Sherman Act was the first established antitrust law.