Exam 8: Government and Markets

Whereas social regulation governs the conditions of doing business in a particular industry, economic regulation addresses the conditions under which goods are produced in a variety of industries.

The traditional reason for allowing a public utility to operate as a monopoly, subject to regulation of price and output policies, is that the firm is a natural monopoly.

Proponents of government subsidies for the building of sports stadiums argue that the presence of a professional sports team improves the quality of life in the community, even for those who do not attend games.

When the production of a good entails spillover benefits, too much of it is produced and there is an over-allocation of resources to its use.

The U.S. government has relied primarily on ______ to force firms to decrease their pollution.

Proponents of incentive-based regulations for reducing acid rain maintain that they result in companies with the highest cost of decreasing acid rain being the ones to make relatively large cutbacks.

The purpose of the deregulation movement of the 1970s and 1980s was to

Figure 7.1 Market Failure -Refer to Figure 7.1. Without any government intervention, the free market results in price equal to ______ and quantity equal to ______.

The power shortages that occurred in California in the mid to late 1990s were caused by the state's complete deregulation of electric utility companies in 1996.

When the production of a good results in spillover costs, the market system fails by producing ______ of it and ______ resources to its use.

All of the following are sources of market failure except

The purpose of the deregulation movement of the 1970s and 1980s was to dismantle many ______ that had outlived their usefulness.

Social regulation controls the prices, wages, conditions of entry, and standards of service of particular industries.

The federal antitrust laws are enforced primarily by the

During the late 1800s, large corporations formed ______, a nineteenth century name given to cartels and other business agreements intended to restrain competition.

To decrease pollution, the U.S. government relies primarily on command-and-control regulations, rather than incentive-based regulations.

To help correct for the problem of economic inequality, government provides people in need with transfer payments such as unemployment compensation, food stamps, and Aid to Families with Dependent Children.

To force the market to decrease its pollution, government imposes command-and-control regulations on producers. Such regulations include all of the following except

According to the Clayton Act, every contract, combination in the form of a trust, or conspiracy in restraint of trade is illegal.

______ is the attempt to foster a market structure that will result in additional competition and less anti-competitive behavior that harms consumers.