Question 1

If a firm engages in a vertical merger that substantially reduces competition, then it is likely to be in violation of the:

Accepted Answer

A)  Clayton Act. 
B)  Celler-Kefauver Act. 
C)  Sherman Antitrust Act. 
D)  Federal Trade Commission Act. 
A)  Clayton Act. 
B)  Celler-Kefauver Act. 
C)  Sherman Antitrust Act. 
D)  Federal Trade Commission Act.

Question 2

The public interest theory of regulation holds that regulators seek to find market solutions that are economically efficient.

Accepted Answer

A) True 
 B)False

Question 3

The public choice theory of regulation indicates that a regulatory agency:

Accepted Answer

A)  encourages other regulatory agencies to deregulate their industries. 
B)  seeks to find market solutions that are economically efficient. 
C)  extends its regulatory powers over industries it was not intended to regulate. 
D)  promotes the interests of government employees over those of the public. 
A)  encourages other regulatory agencies to deregulate their industries. 
B)  seeks to find market solutions that are economically efficient. 
C)  extends its regulatory powers over industries it was not intended to regulate. 
D)  promotes the interests of government employees over those of the public.

Question 4

Many government imposed regulations on markets are based on the presumption that consumers are _______ , but often do not have _______ to make choices in their best interests.

Accepted Answer

A)  rational; sufficient information 
B)  irrational; the will 
C)  willing; the determination 
D)  rational; sufficient incomes 
A)  rational; sufficient information 
B)  irrational; the will 
C)  willing; the determination 
D)  rational; sufficient incomes

Question 5

Price-fixing was outlawed by the Sherman Antitrust Act.

Accepted Answer

A) True 
 B)False

Question 6

The application of the Sherman Antitrust Act was unsuccessful in the Standard Oil case.

Accepted Answer

A) True 
 B)False

Question 7

Compare and contrast the economic issues involved in each of the following pairs of terms:
a.Horizontal and vertical mergers versus joint ventures
b.Rule of reason versus illegal per se
c.Antitrust policy versus regulation and deregulation

Accepted Answer

a. Horizontal and vertical mergers versu

Question 8

The Celler-Kefauver Act extended the antitrust provisions of earlier legislation by blocking vertical mergers where a reduction in competition could be shown.

Accepted Answer

A) True 
 B)False

Question 9

According to current Justice Department guidelines, any industry with a Herfindahl-Hirschman Index under _______ would be considered to be unconcentrated.

Accepted Answer

A)  1,000 
B)  4,000 
C)  8,000 
D)  10,000 
A)  1,000 
B)  4,000 
C)  8,000 
D)  10,000

Question 10

When judging the anticompetitive effects of a horizontal merger, the FTC and Justice Department are likely to look most closely at the:

Accepted Answer

A)  combined concentration ratio of the merged firms. 
B)  size of the Herfindahl-Hirschman Index but not the change in the index. 
C)  change in the Herfindahl-Hirschman Index but not the size of the index. 
D)  size of the Herfindahl-Hirschman Index and the change in the index. 
A)  combined concentration ratio of the merged firms. 
B)  size of the Herfindahl-Hirschman Index but not the change in the index. 
C)  change in the Herfindahl-Hirschman Index but not the size of the index. 
D)  size of the Herfindahl-Hirschman Index and the change in the index.

Question 11

Critics of antitrust laws and enforcement activity argue that:

Accepted Answer

A)  among the 500 largest companies in the United States in 1950, almost none have been displaced in the last 50 years. 
B)  the emergence of new firms suggests dynamism and the competitive nature of the economy. 
C)  it is necessary that an industry be perfectly competitive to achieve the benefits of competition. 
D)  there is not enough enforcement, and more effort should go into it. 
A)  among the 500 largest companies in the United States in 1950, almost none have been displaced in the last 50 years. 
B)  the emergence of new firms suggests dynamism and the competitive nature of the economy. 
C)  it is necessary that an industry be perfectly competitive to achieve the benefits of competition. 
D)  there is not enough enforcement, and more effort should go into it.

Question 12

Consumer protection laws may make some products more expensive.

Accepted Answer

A) True 
 B)False

Question 13

Consumer protection laws generally do not:

Accepted Answer

A)  provide benefits to the consumer. 
B)  increase costs to the consumer. 
C)  increase consumer choices. 
D)  provide information to consumers. 
A)  provide benefits to the consumer. 
B)  increase costs to the consumer. 
C)  increase consumer choices. 
D)  provide information to consumers.

Question 14

The tendency for a regulatory agency to promote the interests of the industry it regulates, rather than the public's interests, is explained by the:

Accepted Answer

A)  theory of imperfect competition. 
B)  public interest theory of regulation. 
C)  capture theory of regulation. 
D)  market failure of externalities. 
A)  theory of imperfect competition. 
B)  public interest theory of regulation. 
C)  capture theory of regulation. 
D)  market failure of externalities.

Question 15

A merger that combines two or more producers of the same good or service is called a ________ merger.

Accepted Answer

A)  vertical 
B)  horizontal 
C)  slanting 
D)  sideways 
A)  vertical 
B)  horizontal 
C)  slanting 
D)  sideways

Question 16

The rule of reason refers to:

Accepted Answer

A)  the notion that those accused of using monopoly power to restrain trade should be judged by their behavior. 
B)  the fact that courts should consider the reasonableness of mergers in comparison to other profit-making schemes. 
C)  the legal and economic basis for a fair return to a large business firm. 
D)  the other side of excessive price discrimination. 
A)  the notion that those accused of using monopoly power to restrain trade should be judged by their behavior. 
B)  the fact that courts should consider the reasonableness of mergers in comparison to other profit-making schemes. 
C)  the legal and economic basis for a fair return to a large business firm. 
D)  the other side of excessive price discrimination.

Question 17

The marginal decision rule as applied to regulation states that regulations:

Accepted Answer

A)  should be undertaken when their marginal benefits exceed their marginal costs. 
B)  should be undertaken when their marginal benefits are less than their marginal costs. 
C)  that improve safety should be undertaken, whatever the costs. 
D)  should be designed to minimize the net benefit. 
A)  should be undertaken when their marginal benefits exceed their marginal costs. 
B)  should be undertaken when their marginal benefits are less than their marginal costs. 
C)  that improve safety should be undertaken, whatever the costs. 
D)  should be designed to minimize the net benefit.

Question 18

Public choice theory suggests that in the regulatory process:

Accepted Answer

A)  tech group pursues greater efficiency. 
B)  the various groups involved pursue their own respective interests. 
C)  individuals act to advance the public interest. 
D)  bureaucrats act to advance the public interest. 
A)  tech group pursues greater efficiency. 
B)  the various groups involved pursue their own respective interests. 
C)  individuals act to advance the public interest. 
D)  bureaucrats act to advance the public interest.

Question 19

Selling below cost by foreign firms is not subject to antitrust or other regulatory restrictions.

Accepted Answer

A) True 
 B)False

Question 20

Increased global competitiveness has had no impact on antitrust policy.

Accepted Answer

A) True 
 B)False

If a firm engages in a vertical merger that substantially reduces competition, then it is likely to be in violation of the:

The public interest theory of regulation holds that regulators seek to find market solutions that are economically efficient.

The public choice theory of regulation indicates that a regulatory agency:

Many government imposed regulations on markets are based on the presumption that consumers are _ , but often do not have _ to make choices in their best interests.

Price-fixing was outlawed by the Sherman Antitrust Act.

The application of the Sherman Antitrust Act was unsuccessful in the Standard Oil case.

Compare and contrast the economic issues involved in each of the following pairs of terms: a.Horizontal and vertical mergers versus joint ventures b.Rule of reason versus illegal per se c.Antitrust policy versus regulation and deregulation

The Celler-Kefauver Act extended the antitrust provisions of earlier legislation by blocking vertical mergers where a reduction in competition could be shown.

According to current Justice Department guidelines, any industry with a Herfindahl-Hirschman Index under _______ would be considered to be unconcentrated.

When judging the anticompetitive effects of a horizontal merger, the FTC and Justice Department are likely to look most closely at the:

Critics of antitrust laws and enforcement activity argue that:

Consumer protection laws may make some products more expensive.

Consumer protection laws generally do not:

The tendency for a regulatory agency to promote the interests of the industry it regulates, rather than the public's interests, is explained by the:

A merger that combines two or more producers of the same good or service is called a ________ merger.

The rule of reason refers to:

The marginal decision rule as applied to regulation states that regulations:

Public choice theory suggests that in the regulatory process:

Selling below cost by foreign firms is not subject to antitrust or other regulatory restrictions.

Increased global competitiveness has had no impact on antitrust policy.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 16: Antitrust Policy and Business Regulation

If a firm engages in a vertical merger that substantially reduces competition, then it is likely to be in violation of the:

The public interest theory of regulation holds that regulators seek to find market solutions that are economically efficient.

The public choice theory of regulation indicates that a regulatory agency:

Many government imposed regulations on markets are based on the presumption that consumers are _______ , but often do not have _______ to make choices in their best interests.

Price-fixing was outlawed by the Sherman Antitrust Act.

The application of the Sherman Antitrust Act was unsuccessful in the Standard Oil case.

Compare and contrast the economic issues involved in each of the following pairs of terms: a.Horizontal and vertical mergers versus joint ventures b.Rule of reason versus illegal per se c.Antitrust policy versus regulation and deregulation

The Celler-Kefauver Act extended the antitrust provisions of earlier legislation by blocking vertical mergers where a reduction in competition could be shown.

According to current Justice Department guidelines, any industry with a Herfindahl-Hirschman Index under _______ would be considered to be unconcentrated.

When judging the anticompetitive effects of a horizontal merger, the FTC and Justice Department are likely to look most closely at the:

Critics of antitrust laws and enforcement activity argue that:

Consumer protection laws may make some products more expensive.

Consumer protection laws generally do not:

The tendency for a regulatory agency to promote the interests of the industry it regulates, rather than the public's interests, is explained by the:

A merger that combines two or more producers of the same good or service is called a ________ merger.

The rule of reason refers to:

The marginal decision rule as applied to regulation states that regulations:

Public choice theory suggests that in the regulatory process:

Selling below cost by foreign firms is not subject to antitrust or other regulatory restrictions.

Increased global competitiveness has had no impact on antitrust policy.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Many government imposed regulations on markets are based on the presumption that consumers are _ , but often do not have _ to make choices in their best interests.