Question 1

The antitrust laws are enforced by government agencies such as the Federal Trade Commission and the Department of Justice.

Accepted Answer

A) True 
 B)False

Question 2

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).

Accepted Answer

A) economies of scale 
B) economies of scope 
C) diminishing marginal returns 
D) marginal cost pricing 
A) economies of scale 
B) economies of scope 
C) diminishing marginal returns 
D) marginal cost pricing

Question 3

Regulated industries that exhibit economies of scale and marginal cost pricing will lead to losses.

Accepted Answer

A) True 
 B)False

Question 4

Deregulation has led to higher prices.

Accepted Answer

A) True 
 B)False

Question 5

What are the reasons that are usually given to justify regulation?

Accepted Answer

Following are the reasons offered to reg

Question 6

Regulatory capture exists when

Accepted Answer

A) regulated firms form special interests and influence politicians who appoint regulators through campaign donations. 
B) regulated firms pay for favorable public media campaigns. 
C) the federal government successfully deregulates an industry. 
D) two or more firms merge to gain a majority market share. 
A) regulated firms form special interests and influence politicians who appoint regulators through campaign donations. 
B) regulated firms pay for favorable public media campaigns. 
C) the federal government successfully deregulates an industry. 
D) two or more firms merge to gain a majority market share.

Question 7

The prices that are in the public's best interest will

Accepted Answer

A) always allow the regulated firm to break even. 
B) always allow the regulated firm to make positive economic profits. 
C) sometimes leave the regulated firm with economic losses. 
D) leave the regulated firm with profits that are about 10 percent higher than those of other firms. 
A) always allow the regulated firm to break even. 
B) always allow the regulated firm to make positive economic profits. 
C) sometimes leave the regulated firm with economic losses. 
D) leave the regulated firm with profits that are about 10 percent higher than those of other firms.

Question 8

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 9

Explain why firms that enjoy economies of scale or scope are candidates for regulation.

Accepted Answer

Where economies of scale exist, one firm

Question 10

Regulation began in the United States in the 1950s.

Accepted Answer

A) True 
 B)False

Question 11

On balance, does market power promote or retard technological innovation?

Accepted Answer

The evidence is not clear-cut. While sma

Question 12

Economies of scope are savings acquired by

Accepted Answer

A) producing many goods simultaneously. 
B) producing enough of one good to reach the minimum efficient scale of production. 
C) selling one product at a loss but selling other products at a profit. 
D) decreasing the regulation of an industry. 
A) producing many goods simultaneously. 
B) producing enough of one good to reach the minimum efficient scale of production. 
C) selling one product at a loss but selling other products at a profit. 
D) decreasing the regulation of an industry.

Question 13

Regulatory agencies always protect consumers by forcing regulated firms to sell at the lowest possible price.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

Unlike the four-firm concentration ratio

Question 15

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

Accepted Answer

A) Decreased manufacturing efficiency in some industries 
B) Increased competition in all industries 
C) Decreased investment in research and development in some industries 
D) Increased prices for some manufactured goods 
A) Decreased manufacturing efficiency in some industries 
B) Increased competition in all industries 
C) Decreased investment in research and development in some industries 
D) Increased prices for some manufactured goods

Question 16

The federal government is most likely to oppose

Accepted Answer

A) the purchase of a firm in danger of bankruptcy by a successful firm. 
B) a merger between two firms in a perfectly competitive industry. 
C) the purchase of one oligopolist by another in an industry with contestable markets. 
D) a merger between two firms in a three-firm industry. 
A) the purchase of a firm in danger of bankruptcy by a successful firm. 
B) a merger between two firms in a perfectly competitive industry. 
C) the purchase of one oligopolist by another in an industry with contestable markets. 
D) a merger between two firms in a three-firm industry.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Following deregulation in the airline industry,

Accepted Answer

A) small carriers have gone out of business but large carriers have not. 
B) large carriers have gone out of business but small carriers have not. 
C) both large carriers and small carriers have gone out of business. 
D) neither large carriers nor small carriers have gone out of business. 
A) small carriers have gone out of business but large carriers have not. 
B) large carriers have gone out of business but small carriers have not. 
C) both large carriers and small carriers have gone out of business. 
D) neither large carriers nor small carriers have gone out of business.

Question 19

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.

Question 20

____ occur(s)when an X percent increase in input use raises output by more than X percent, so that the more the firm produces, the lower its per-unit costs become.

Accepted Answer

A) Economies of scope 
B) Scale economies 
C) Product differentiation 
D) Perfect competition 
A) Economies of scope 
B) Scale economies 
C) Product differentiation 
D) Perfect competition

Exam 14: Limiting Market Power: Antitrust and Regulation

The antitrust laws are enforced by government agencies such as the Federal Trade Commission and the Department of Justice.

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).

Regulated industries that exhibit economies of scale and marginal cost pricing will lead to losses.

Deregulation has led to higher prices.

What are the reasons that are usually given to justify regulation?

Regulatory capture exists when

The prices that are in the public's best interest will

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

Explain why firms that enjoy economies of scale or scope are candidates for regulation.

Regulation began in the United States in the 1950s.

On balance, does market power promote or retard technological innovation?

Economies of scope are savings acquired by

Regulatory agencies always protect consumers by forcing regulated firms to sell at the lowest possible price.

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

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

The federal government is most likely to oppose

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

Following deregulation in the airline industry,

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

____ occur(s)when an X percent increase in input use raises output by more than X percent, so that the more the firm produces, the lower its per-unit costs become.

What Is Economics

The Economy: 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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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