Question 1

Policies that preclude the deliberate creation of monopoly and undesirable practices are called

Accepted Answer

A) antitrust policies. 
B) anti-monopoly policies. 
C) anti-competitive policies. 
D) socialism. 
A) antitrust policies. 
B) anti-monopoly policies. 
C) anti-competitive policies. 
D) socialism.

Question 2

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) Pure monopoly 
B) Perfect competition 
C) Monopolistic competition 
D) Oligopoly 
A) Pure monopoly 
B) Perfect competition 
C) Monopolistic competition 
D) Oligopoly

Question 5

The government considers a market to be unconcentrated if its HHI number is less than ____, and highly concentrated if that number exceeds ____.

Accepted Answer

A) 1,000; 1,800 
B) 100; 9,000 
C) 50; 500 
D) 500; 1,300 
A) 1,000; 1,800 
B) 100; 9,000 
C) 50; 500 
D) 500; 1,300

Question 6

Cost-plus pricing and guaranteed profit regulation give the same results.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Bigness, or large firms, may benefit consumers in which of the following ways?

Accepted Answer

A) Larger firms usually charge lower prices than smaller firms. 
B) Larger firms with monopoly power definitely have greater incentive to be efficient and innovative. 
C) Larger firms may take advantage of economies of scale and scope. 
D) Larger firms are more responsive to consumers' desires. 
A) Larger firms usually charge lower prices than smaller firms. 
B) Larger firms with monopoly power definitely have greater incentive to be efficient and innovative. 
C) Larger firms may take advantage of economies of scale and scope. 
D) Larger firms are more responsive to consumers' desires.

Question 9

Under a tying contract,

Accepted Answer

A) the price a buyer must pay for a good is tied to the size of his purchase. 
B) a customer agrees as a condition of buying a good to purchase one or more additional goods from the same seller. 
C) a firm agrees to allow members of its competitors' boards of directors to sit on its board. 
D) a firm agrees to pay an intermediary for having arranged a business deal for the firm. 
A) the price a buyer must pay for a good is tied to the size of his purchase. 
B) a customer agrees as a condition of buying a good to purchase one or more additional goods from the same seller. 
C) a firm agrees to allow members of its competitors' boards of directors to sit on its board. 
D) a firm agrees to pay an intermediary for having arranged a business deal for the firm.

Question 10

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 monopolies of a service that is important to buyers. 
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 monopolies of a service that is important to buyers. 
D) cutthroat competition would probably occur if the government did not intervene.

Question 11

Firms with monopoly power tend to be more efficient than competitive firms.

Accepted Answer

A) True 
 B)False

Question 12

List and discuss the importance of the major effects of the deregulation that occurred in the 1980s.

Accepted Answer

Baumol and Blinder list seven effects:​

Question 13

____ occur 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

Question 14

The concept of economies of scope describes the savings acquired from simultaneous production of different products.

Accepted Answer

A) True 
 B)False

Question 15

Briefly review the history of antitrust legislation in the United States.

Accepted Answer

The Sherman Act of 1890 prohibited all c

Question 16

Following mergers that raised the market shares of two airlines to 79 and 82 percent, respectively, of traffic in their hub cities, prices of service rose and the quantities of service fell, even though in most other markets prices fell and quantities increased.The result suggests that these markets

Accepted Answer

A) were contestable. 
B) were monopolized. 
C) become more competitive due to oligopolistic rivalries. 
D) had no barriers to entry. 
A) were contestable. 
B) were monopolized. 
C) become more competitive due to oligopolistic rivalries. 
D) had no barriers to entry.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

As an apparent result of airline deregulation,

Accepted Answer

A) many small communities have been left without airline service. 
B) the wages and benefits of airline workers have been reduced. 
C) air fares have risen more quickly than they probably would have under continued regulation. 
D) small commuter airlines have almost vanished. 
A) many small communities have been left without airline service. 
B) the wages and benefits of airline workers have been reduced. 
C) air fares have risen more quickly than they probably would have under continued regulation. 
D) small commuter airlines have almost vanished.

Question 19

The Department of Justice generally

Accepted Answer

A) is not involved in merger policy. 
B) opposes horizontal mergers but permits conglomerate mergers. 
C) opposes only mergers that might reduce competition. 
D) opposes mergers whose apparent motive is obtaining economies of scale. 
A) is not involved in merger policy. 
B) opposes horizontal mergers but permits conglomerate mergers. 
C) opposes only mergers that might reduce competition. 
D) opposes mergers whose apparent motive is obtaining economies of scale.

Question 20

The Herfindahl-Hirschman Index measures

Accepted Answer

A) concentration in the industry. 
B) industrial average output. 
C) economies of scale. 
D) consumer confidence. 
A) concentration in the industry. 
B) industrial average output. 
C) economies of scale. 
D) consumer confidence.

Exam 13: Limiting Market Power: Regulation and Antitrust

Policies that preclude the deliberate creation of monopoly and undesirable practices are called

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

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

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

The government considers a market to be unconcentrated if its HHI number is less than ____, and highly concentrated if that number exceeds ____.

Cost-plus pricing and guaranteed profit regulation give the same results.

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).

Bigness, or large firms, may benefit consumers in which of the following ways?

Under a tying contract,

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

Firms with monopoly power tend to be more efficient than competitive firms.

List and discuss the importance of the major effects of the deregulation that occurred in the 1980s.

____ occur 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.

The concept of economies of scope describes the savings acquired from simultaneous production of different products.

Briefly review the history of antitrust legislation in the United States.

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

As an apparent result of airline deregulation,

The Department of Justice generally

The Herfindahl-Hirschman Index measures

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

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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

Filters

The government considers a market to be unconcentrated if its HHI number is less than , and highly concentrated if that number exceeds .