Question 1

The U.S. antitrust enforcers determine whether a merger violates antitrust laws by examining

Accepted Answer

A)  both the resulting change in the HHI and the level of post-merger HHI. 
B)  only the resulting change in the HHI but not the level of HHI after the merger. 
C)  both the size of the market after the merger and the profits of the mergers. 
D)  whether the mergers are monopolies before they merge. 
A)  both the resulting change in the HHI and the level of post-merger HHI. 
B)  only the resulting change in the HHI but not the level of HHI after the merger. 
C)  both the size of the market after the merger and the profits of the mergers. 
D)  whether the mergers are monopolies before they merge.

Question 2

If antitrust legislation is successful, then

Accepted Answer

A)  firms will produce the quantity at which marginal cost equals marginal revenue. 
B)  most firms will be earning a positive economic profit. 
C)  the price of each item will equal its marginal social opportunity costs. 
D)  natural monopoly will be eliminated. 
A)  firms will produce the quantity at which marginal cost equals marginal revenue. 
B)  most firms will be earning a positive economic profit. 
C)  the price of each item will equal its marginal social opportunity costs. 
D)  natural monopoly will be eliminated.

Question 3

The United States as a whole would be inappropriate as the relevant geographic market when an antitrust case involved

Accepted Answer

A)  ABC and NBC. 
B)  two auto producers. 
C)  two steel producers. 
D)  two concrete producers. 
A)  ABC and NBC. 
B)  two auto producers. 
C)  two steel producers. 
D)  two concrete producers.

Question 4

Which of the following is concerned with social regulation?

Accepted Answer

A)  Federal Reserve Board 
B)  Sherman Commission 
C)  Food and Drug Administration 
D)  Board of Education 
A)  Federal Reserve Board 
B)  Sherman Commission 
C)  Food and Drug Administration 
D)  Board of Education

Question 5

Which of the statements best describes the difference between economic regulation and social regulation?

Accepted Answer

A)  There are no significant differences between economic and social regulation, social regulation is a more modern way of regulating an economy. 
B)  Economic regulation focuses on output and price; social regulation focuses on improving the quality of life. 
C)  Social regulation focuses on output and price; economic regulation focuses on quality of life issues. 
D)  Social regulation targets industries like transportation, while economic regulation targets utilities. 
A)  There are no significant differences between economic and social regulation, social regulation is a more modern way of regulating an economy. 
B)  Economic regulation focuses on output and price; social regulation focuses on improving the quality of life. 
C)  Social regulation focuses on output and price; economic regulation focuses on quality of life issues. 
D)  Social regulation targets industries like transportation, while economic regulation targets utilities.

Question 6

Enforcement of antitrust policy is the responsibility of

Accepted Answer

A)  the Trust Division of Congress and the World Trade Organization. 
B)  the Federal Trade Commission and the Antitrust Division of the Department of Justice. 
C)  the World Trade Organization and the FDA. 
D)  the Food and Drug Administration and Congress. 
A)  the Trust Division of Congress and the World Trade Organization. 
B)  the Federal Trade Commission and the Antitrust Division of the Department of Justice. 
C)  the World Trade Organization and the FDA. 
D)  the Food and Drug Administration and Congress.

Question 7

One problem that might occur as a result of economic regulation is

Accepted Answer

A)  the firm may be earning more than a normal rate of return on investment. 
B)  the quality of service might be lowered. 
C)  that social regulation may follow. 
D)  the demand for the good may be greater than the supply. 
A)  the firm may be earning more than a normal rate of return on investment. 
B)  the quality of service might be lowered. 
C)  that social regulation may follow. 
D)  the demand for the good may be greater than the supply.

Question 8

According to the capture hypothesis, it appears that regulators eventually end up

Accepted Answer

A)  adopting policies that benefit the firms being regulated. 
B)  adopting policies that benefit consumers at the expense of the regulated firms. 
C)  adopting policies that benefit no one. 
D)  satisfying neither producers nor consumers, but striving to control as much as possible. 
A)  adopting policies that benefit the firms being regulated. 
B)  adopting policies that benefit consumers at the expense of the regulated firms. 
C)  adopting policies that benefit no one. 
D)  satisfying neither producers nor consumers, but striving to control as much as possible.

Question 9

The benefits of social regulation usually are

Accepted Answer

A)  small. 
B)  obvious to people while the costs are hidden. 
C)  less than the costs of social regulation, reducing overall welfare. 
D)  difficult to measure. 
A)  small. 
B)  obvious to people while the costs are hidden. 
C)  less than the costs of social regulation, reducing overall welfare. 
D)  difficult to measure.

Question 10

Which of the following federal agencies is engaged in social regulation?

Accepted Answer

A)  Equal Employment Opportunity Commission 
B)  Office of the Comptroller of the Currency 
C)  The Securities and Exchange Commission 
D)  Federal Deposit Insurance Corporation 
A)  Equal Employment Opportunity Commission 
B)  Office of the Comptroller of the Currency 
C)  The Securities and Exchange Commission 
D)  Federal Deposit Insurance Corporation

Question 11

The main goal of antitrust policy is to

Accepted Answer

A)  encourage firms to produce at the MR = demand level. 
B)  regulate natural monopolies. 
C)  prevent the monopolization of industries. 
D)  prevent the nationalization of industries. 
A)  encourage firms to produce at the MR = demand level. 
B)  regulate natural monopolies. 
C)  prevent the monopolization of industries. 
D)  prevent the nationalization of industries.

Question 12

A measure of monopoly power used by the government is the

Accepted Answer

A)  percentage share of the relevant market or market share test. 
B)  profit of the firm compared to other firms in the industry. 
C)  price charged by the firm for goods and services. 
D)  percentage difference between price and marginal cost. 
A)  percentage share of the relevant market or market share test. 
B)  profit of the firm compared to other firms in the industry. 
C)  price charged by the firm for goods and services. 
D)  percentage difference between price and marginal cost.

Question 13

One of the elements of monopolization is

Accepted Answer

A)  having a superior product or having a superior business acumen.. 
B)  the possession of monopoly power in the relevant market. 
C)  when only one firm exists in an industry. 
D)  having a significant pricing power due to an accident in the relevant market. 
A)  having a superior product or having a superior business acumen.. 
B)  the possession of monopoly power in the relevant market. 
C)  when only one firm exists in an industry. 
D)  having a significant pricing power due to an accident in the relevant market.

Question 14

Why is antitrust legislation necessary?

Accepted Answer

A)  Monopolies tend to misallocate resources. 
B)  All monopolies are unlawful in the United States. 
C)  Monopolies tend to allocate resources in a socially optimal manner. 
D)  Monopolies will always make a profit in the long run. 
A)  Monopolies tend to misallocate resources. 
B)  All monopolies are unlawful in the United States. 
C)  Monopolies tend to allocate resources in a socially optimal manner. 
D)  Monopolies will always make a profit in the long run.

Question 15

Which antitrust law is sometimes called the "Chain Store Act"?

Accepted Answer

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

Question 16

For a natural monopoly, long-run average costs

Accepted Answer

A)  fall as output increases. 
B)  rise as output increases. 
C)  fall as output falls. 
D)  rise as output falls. 
A)  fall as output increases. 
B)  rise as output increases. 
C)  fall as output falls. 
D)  rise as output falls.

Question 17

Regulation of a natural monopoly that forces it to price and produce as if it were a competitive firm results in

Accepted Answer

A)  the market being instantly competitive. 
B)  higher profits for the monopoly. 
C)  economic losses for the monopoly. 
D)  a highly unstable marketplace. 
A)  the market being instantly competitive. 
B)  higher profits for the monopoly. 
C)  economic losses for the monopoly. 
D)  a highly unstable marketplace.

Question 18

The total costs of federal regulation

Accepted Answer

A)  encompasses only explicit costs of satisfying regulatory demands. 
B)  also includes the explicit costs associated with regulations issued by 50 different state governments. 
C)  encompasses only opportunity costs of satisfying regulatory demands. 
D)  encompasses both explicit and opportunity costs of satisfying regulatory demands.. 
A)  encompasses only explicit costs of satisfying regulatory demands. 
B)  also includes the explicit costs associated with regulations issued by 50 different state governments. 
C)  encompasses only opportunity costs of satisfying regulatory demands. 
D)  encompasses both explicit and opportunity costs of satisfying regulatory demands..

Question 19

-Refer to the above figure. An unregulated natural monopolist's profits will be

Accepted Answer

A)  profits equal to   times distance a-c. 
B)  losses equal to   times distance f-g. 
C)  losses equal to   times distance d-e. 
D)  profits equal to   times distance a-b. 
A)  profits equal to   times distance a-c. 
B)  losses equal to   times distance f-g. 
C)  losses equal to   times distance d-e. 
D)  profits equal to   times distance a-b.

Question 20

The hypothesis that regulators eventually adopt policies that benefit the producers in the industry is known as the

Accepted Answer

A)  capture hypothesis. 
B)  producers' hypothesis. 
C)  share-the-gains, share-the-pains hypothesis. 
D)  it's-a-rip-off hypothesis. 
A)  capture hypothesis. 
B)  producers' hypothesis. 
C)  share-the-gains, share-the-pains hypothesis. 
D)  it's-a-rip-off hypothesis.

Exam 27: Regulation and Antitrust Policy in a Globalized Economy

The U.S. antitrust enforcers determine whether a merger violates antitrust laws by examining

If antitrust legislation is successful, then

The United States as a whole would be inappropriate as the relevant geographic market when an antitrust case involved

Which of the following is concerned with social regulation?

Which of the statements best describes the difference between economic regulation and social regulation?

Enforcement of antitrust policy is the responsibility of

One problem that might occur as a result of economic regulation is

According to the capture hypothesis, it appears that regulators eventually end up

The benefits of social regulation usually are

Which of the following federal agencies is engaged in social regulation?

The main goal of antitrust policy is to

A measure of monopoly power used by the government is the

One of the elements of monopolization is

Why is antitrust legislation necessary?

Which antitrust law is sometimes called the "Chain Store Act"?

For a natural monopoly, long-run average costs

Regulation of a natural monopoly that forces it to price and produce as if it were a competitive firm results in

The total costs of federal regulation

-Refer to the above figure. An unregulated natural monopolist's profits will be

The hypothesis that regulators eventually adopt policies that benefit the producers in the industry is known as the

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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