Question 1

Modern antitrust policy began in response to

Accepted Answer

A) abuses of market power in the oil industry. 
B) the inability of railroads to compete effectively with the new trucking industry. 
C) the charge that the rights of big business were not adequately protected. 
D) attempts by business leaders to pack Congress with corrupt legislators. 
A) abuses of market power in the oil industry. 
B) the inability of railroads to compete effectively with the new trucking industry. 
C) the charge that the rights of big business were not adequately protected. 
D) attempts by business leaders to pack Congress with corrupt legislators.

Question 2

Deregulation has led to higher prices.

Accepted Answer

A) True 
 B)False

Question 3

Changes in the rate charged by electric power companies are subject to government control because

Accepted Answer

A) the electric power companies are government enterprises. 
B) consumer ignorance makes it impossible to know what rates are fair. 
C) the electric power companies are firms that exhibit economies of scale. 
D) cutthroat competition would probably occur if the government did not intervene. 
A) the electric power companies are government enterprises. 
B) consumer ignorance makes it impossible to know what rates are fair. 
C) the electric power companies are firms that exhibit economies of scale. 
D) cutthroat competition would probably occur if the government did not intervene.

Question 4

Highly concentrated markets have a large number of price-taking firms.

Accepted Answer

A) True 
 B)False

Question 5

Government agencies may fail to identify anticompetitive behavior if

Accepted Answer

A) competitors have been forced out of business due to inefficient production and the inability to keep prices low. 
B) dominant firms raise prices to keep rivals competitive. 
C) cartel members decide to disinherit a member firm. 
D) Wall Street supports lower prices. 
A) competitors have been forced out of business due to inefficient production and the inability to keep prices low. 
B) dominant firms raise prices to keep rivals competitive. 
C) cartel members decide to disinherit a member firm. 
D) Wall Street supports lower prices.

Question 6

Universal service means that one company provides service to all consumers, everywhere.

Accepted Answer

A) True 
 B)False

Question 7

Which is not considered an "anticompetitive practice"?

Accepted Answer

A) Firms threaten to destroy competitors through innovation. 
B) A firm forces competitors to compete on prices. 
C) A firm prevents the entry of new rivals. 
D) Firms share intellectual property that may be helpful for research and development. 
A) Firms threaten to destroy competitors through innovation. 
B) A firm forces competitors to compete on prices. 
C) A firm prevents the entry of new rivals. 
D) Firms share intellectual property that may be helpful for research and development.

Question 8

Selling at a price that is only slightly above the firm's cost of production is called predatory pricing.

Accepted Answer

A) True 
 B)False

Question 9

It is easy to discern the difference between vigorous competition and the exercise of monopoly power.

Accepted Answer

A) True 
 B)False

Question 10

List appropriate criteria for deciding whether a merger of two firms producing similar products should be permitted.

Accepted Answer

Mergers that take place between two firm

Question 11

If the automobile industry has become highly concentrated and cartelized.To maintain profits, firms may

Accepted Answer

A) allow newcomers to favorably enter the market. 
B) become price takers. 
C) prevent entry. 
D) lower prices to raise revenues. 
A) allow newcomers to favorably enter the market. 
B) become price takers. 
C) prevent entry. 
D) lower prices to raise revenues.

Question 12

Archer Daniels Midland (ADM) was convicted for this anticompetitive practice in the lysine market.

Accepted Answer

A) Price fixing 
B) Predatory pricing 
C) Bundling 
D) Exclusive supply contracts 
A) Price fixing 
B) Predatory pricing 
C) Bundling 
D) Exclusive supply contracts

Exam 14: Limiting Market Power: Antitrust and Regulation

Modern antitrust policy began in response to

Deregulation has led to higher prices.

Changes in the rate charged by electric power companies are subject to government control because

Highly concentrated markets have a large number of price-taking firms.

Government agencies may fail to identify anticompetitive behavior if

Universal service means that one company provides service to all consumers, everywhere.

Which is not considered an "anticompetitive practice"?

Selling at a price that is only slightly above the firm's cost of production is called predatory pricing.

It is easy to discern the difference between vigorous competition and the exercise of monopoly power.

List appropriate criteria for deciding whether a merger of two firms producing similar products should be permitted.

If the automobile industry has become highly concentrated and cartelized.To maintain profits, firms may

Archer Daniels Midland (ADM) was convicted for this anticompetitive practice in the lysine market.

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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