Question 1

The current deregulatory movement began to change laws to deregulation in the

Accepted Answer

A) early 1970s. 
B) late 1970s. 
C) early 1980s. 
D) early 1990s. 
A) early 1970s. 
B) late 1970s. 
C) early 1980s. 
D) early 1990s.

Question 2

Economists ordinarily favor setting price equal to marginal cost when this option is feasible.

Accepted Answer

A) True 
 B)False

Question 3

Powers of many regulatory agencies are designed to protect public health and safety.

Accepted Answer

A) True 
 B)False

Question 4

Economies of scope are present when a bank also sells insurance and provides brokerage services for stocks and bonds.

Accepted Answer

A) True 
 B)False

Question 5

In many regulated industries, marginal cost will be

Accepted Answer

A) below average cost. 
B) above total cost. 
C) above marginal fixed cost. 
D) below incremental cost. 
A) below average cost. 
B) above total cost. 
C) above marginal fixed cost. 
D) below incremental cost.

Question 6

Which of the following acts prohibits directors of one company from sitting on the board of a competitor?

Accepted Answer

A) Sherman Act 
B) Federal Trade Commission Act 
C) Robinson-Patman Act 
D) Clayton Act 
A) Sherman Act 
B) Federal Trade Commission Act 
C) Robinson-Patman Act 
D) Clayton Act

Question 7

Antitrust laws prohibit undesirable business practices by firms holding monopoly power.

Accepted Answer

A) True 
 B)False

Question 8

The concentration ratio of an industry is a measure that captures the share of the industry's total output that is produced by its four largest firms.

Accepted Answer

A) True 
 B)False

Question 9

Which form of price regulation increases consumer well-being and allows the firm to stay in business?

Accepted Answer

A) Allow the firm to set its own rate of return. 
B) Set prices equal to marginal cost. 
C) Set prices equal to average cost. 
D) Set lower prices when efficiency improves. 
A) Allow the firm to set its own rate of return. 
B) Set prices equal to marginal cost. 
C) Set prices equal to average cost. 
D) Set lower prices when efficiency improves.

Question 10

In regulated industries, the optimal regulation is to set price such that MC=P.

Accepted Answer

A) True 
 B)False

Question 11

What is not an effect of deregulation in the airline and trucking industries?

Accepted Answer

A) Lower prices of many services 
B) Increased entry of new firms into deregulated industries 
C) Lower income to unions working in deregulated industries 
D) Improvements in the quality of services 
A) Lower prices of many services 
B) Increased entry of new firms into deregulated industries 
C) Lower income to unions working in deregulated industries 
D) Improvements in the quality of services

Question 12

The Department of Justice and the Federal Trade Commission enforce antitrust laws.

Accepted Answer

A) True 
 B)False

Question 13

Bottlenecks may force competitors to offer services within the same network.

Accepted Answer

A) True 
 B)False

Question 14

Airline deregulation has led to (i) lower prices or (ii) a deterioration of service to isolated communities.

Accepted Answer

A) i and ii 
B) i but not ii 
C) ii but not i 
D) neither i nor ii 
A) i and ii 
B) i but not ii 
C) ii but not i 
D) neither i nor ii

Question 15

What would the Herfindahl-Hirschman Index equal for an industry consisting of six firms with market shares of 5 percent, 10 percent, 15 percent, 20 percent, 25 percent, and 25 percent?

Accepted Answer

A) 100 
B) 1,350 
C) 1,375 
D) 2,000 
A) 100 
B) 1,350 
C) 1,375 
D) 2,000

Question 16

A monopoly firm operates with declining average cost.If regulators impose marginal cost pricing, the market will

Accepted Answer

A) remain a monopoly but behave like a perfectly competitive industry. 
B) become perfectly competitive. 
C) be entered by additional firms but will not necessarily become perfectly competitive. 
D) maximize consumer surplus. 
A) remain a monopoly but behave like a perfectly competitive industry. 
B) become perfectly competitive. 
C) be entered by additional firms but will not necessarily become perfectly competitive. 
D) maximize consumer surplus.

Question 17

If a firm is a natural monopoly, society will benefit if it is broken into several small companies.

Accepted Answer

A) True 
 B)False

Question 18

Economies of scale tend to create natural monopolies.

Accepted Answer

A) True 
 B)False

Question 19

Discuss the advantages of the Herfindahl-Hirschman Index compared with the four-firm concentration ratio.

Accepted Answer

Unlike the four-firm concentration ratio

Question 20

The federal government has the power to investigate and to try to block

Accepted Answer

A) only voluntary mergers between firms. 
B) only hostile takeovers. 
C) only friendly takeovers. 
D) any combination of the ownership of previously independent firms that increases concentration. 
A) only voluntary mergers between firms. 
B) only hostile takeovers. 
C) only friendly takeovers. 
D) any combination of the ownership of previously independent firms that increases concentration.

Exam 14: Limiting Market Power: Antitrust and Regulation

The current deregulatory movement began to change laws to deregulation in the

Economists ordinarily favor setting price equal to marginal cost when this option is feasible.

Powers of many regulatory agencies are designed to protect public health and safety.

Economies of scope are present when a bank also sells insurance and provides brokerage services for stocks and bonds.

In many regulated industries, marginal cost will be

Which of the following acts prohibits directors of one company from sitting on the board of a competitor?

Antitrust laws prohibit undesirable business practices by firms holding monopoly power.

The concentration ratio of an industry is a measure that captures the share of the industry's total output that is produced by its four largest firms.

Which form of price regulation increases consumer well-being and allows the firm to stay in business?

In regulated industries, the optimal regulation is to set price such that MC=P.

What is not an effect of deregulation in the airline and trucking industries?

The Department of Justice and the Federal Trade Commission enforce antitrust laws.

Bottlenecks may force competitors to offer services within the same network.

Airline deregulation has led to (i) lower prices or (ii) a deterioration of service to isolated communities.

What would the Herfindahl-Hirschman Index equal for an industry consisting of six firms with market shares of 5 percent, 10 percent, 15 percent, 20 percent, 25 percent, and 25 percent?

A monopoly firm operates with declining average cost.If regulators impose marginal cost pricing, the market will

If a firm is a natural monopoly, society will benefit if it is broken into several small companies.

Economies of scale tend to create natural monopolies.

Discuss the advantages of the Herfindahl-Hirschman Index compared with the four-firm concentration ratio.

The federal government has the power to investigate and to try to block

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

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