Question 1

Anticompetitive price discrimination, interlocking directorates, and tying contracts were banned by the

Accepted Answer

A)  Federal Trade Commission Act.
B)  Clayton Act.
C)  Sherman Act.
D)  Celler-Kefauver Act.E) A) and B)
F) A) and C)

Question 2

A criticism of social regulation is that it

Accepted Answer

A)  contributes to the growth of natural monopoly.
B)  increases the rate of innovation in the economy.
C)  decreases the influence of the Federal government on business.
D)  results in many unintended and costly side effects.E) A) and D)
F) B) and C)

Question 3

(Consider This)  According to the Consider This box on catfish and art, which of the following firms were convicted for horizontal price-fixing?

Accepted Answer

A)  Dell and Gateway (personal computer makers) 
B)  Boeing and Airbus (aircraft manufacturers) 
C)  Heinz and Del Monte (food product firms) 
D)  Apple, Harper Collins, and Penguin (e-books) E) All of the above
F) B) and C)

Question 4

Which of the following statements is true?

Accepted Answer

A)  The active antitrust perspective believes that competitive market forces will automatically and actively reduce a firm's monopoly power in the long run.
B)  The active antitrust perspective believes that the government should play the role of officials and umpires and enforce the rules of the competitive game.
C)  The laissez-faire perspective views firms as players in a competitive game who will sometimes violate the rules in order to gain a huge advantage over others.
D)  The laissez-faire perspective believes that an active enforcement of antitrust policy is the only way to reduce the monopoly power of giant firms.E) B) and D)
F) B) and C)

Question 5

Which of the following is mainly involved in social regulation?

Accepted Answer

A)  the Social Security Administration
B)  the Federal Communications Commission
C)  the Food and Drug Administration
D)  the Interstate Commerce CommissionE) A) and B)
F) A) and C)

Question 6

The basic purpose of antitrust laws is to

Accepted Answer

A)  provide subsidies for American business.
B)  limit monopoly power in industry.
C)  control prices to protect consumers.
D)  enforcelaws that restrict competition.E) B) and C)
F) A) and C)

Question 7

The view that the antitrust laws should be enforced relatively leniently because of the tendency for monopoly power to erode over time is known as the

Accepted Answer

A)  structuralist view of antitrust.
B)  behavioralist view of antitrust.
C)  laissez-faire perspective on antitrust.
D)  active antitrust perspective.E) None of the above
F) A) and C)

Question 8

Supporters of social regulation contend that

Accepted Answer

A)  the existence of natural monopoly requires a regulatory response from government.
B)  there is a pressing need to eliminate price-fixing in U.S.business.
C)  higher costs are the price that must be paid for a better society.
D)  the benefits of public ownership of businesses are greater than the costs.E) A) and B)
F) C) and D)

Question 9

Social, as distinct from industrial, regulation is the major focus of the

Accepted Answer

A)  Federal Trade Commission.
B)  Federal Energy Regulatory Commission.
C)  Federal Communications Commission.
D)  Consumer Product Safety Commission.E) B) and C)
F) B) and D)

Question 10

The principal objective of industrial regulation is to

Accepted Answer

A)  increase product safety.
B)  promote improvements in the quality of life.
C)  protect the consuming public from the market power of natural monopolies.
D)  solve problems associated with industry, such as the problems of water and air pollution.E) A) and D)
F) All of the above

Question 11

The cornerstone of antitrust policy in the United States is generally considered to be the Sherman Antitrust Act of 1890.

Accepted Answer

A) True 
 B)False

Question 12

The legal cartel theory indicates that in any industry where market demand and the long-run average total cost curve intersect close to the latter's minimum, government regulation is mandatory and desirable.

Accepted Answer

A) True 
 B)False

Question 13

The Sherman Act was designed to

Accepted Answer

A)  exempt commercial banks from the antitrust laws.
B)  make interlocking directorates legal.
C)  prohibit misleading and antisocial advertising.
D)  make monopoly and acts that restrain trade illegal.E) A) and B)
F) B) and C)

Question 14

The U.S.Justice Department, the Federal Trade Commission, state attorneys general, and injured private parties can independently file charges against firms under the Sherman
Act.

Accepted Answer

A) True 
 B)False

Question 15

Which one of the following is concerned with industrial regulation, as distinct from social regulation?

Accepted Answer

A)  Occupational Safety and Health Administration
B)  Consumer Products Safety Commission
C)  Federal Communications Commission
D)  Environmental Protection AgencyE) B) and D)
F) B) and C)

Question 16

The sum of the squared values of market shares of firms in an industry is referred to as the

Accepted Answer

A)  concentration ratio.
B)  Herfindahl index.
C)  variance value.
D)  antitrust index.E) B) and D)
F) A) and B)

Question 17

Which one of the following is most likely to increase the Herfindahl index of a particular industry?

Accepted Answer

A)  a conglomerate merger
B)  a vertical merger
C)  a price-fixing arrangement among all the industry firms
D)  a horizontal mergerE) C) and D)
F) B) and C)

Question 18

A conglomerate merger is a merger between firms at different stages of the production process of a product, such as a merger between a flour milling company and a baking company.

Accepted Answer

A) True 
 B)False

Question 19

A major shortcoming of the Sherman Act was that

Accepted Answer

A)  it was too specific.
B)  it was never enforced by the courts.
C)  violators of the act were forced out of business.
D)  it did not explicitly state which activities were illegal.E) B) and C)
F) B) and D)

Question 20

A labor market application of the legal cartel theory of regulation would be

Accepted Answer

A)  unemployment benefits.
B)  the Full Employment Act.
C)  Equal Employment Opportunities provisions.
D)  occupational licensing.E) A) and B)
F) All of the above

Exam 21: Antitrust Policy and Regulation

Which one of the following is most likely to increase the Herfindahl index of a particular industry?

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Supporters of social regulation contend that

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The Sherman Act was designed to

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Which of the following statements is true?

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Which one of the following is concerned with industrial regulation, as distinct from social regulation?

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The basic purpose of antitrust laws is to

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The sum of the squared values of market shares of firms in an industry is referred to as the

Correct AnswerverifiedShow Answer

The cornerstone of antitrust policy in the United States is generally considered to be the Sherman Antitrust Act of 1890.

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Which of the following is mainly involved in social regulation?

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The principal objective of industrial regulation is to

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A labor market application of the legal cartel theory of regulation would be

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A major shortcoming of the Sherman Act was that

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Anticompetitive price discrimination, interlocking directorates, and tying contracts were banned by the

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(Consider This) According to the Consider This box on catfish and art, which of the following firms were convicted for horizontal price-fixing?

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A criticism of social regulation is that it

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Social, as distinct from industrial, regulation is the major focus of the

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A conglomerate merger is a merger between firms at different stages of the production process of a product, such as a merger between a flour milling company and a baking company.

Correct AnswerverifiedShow Answer

The view that the antitrust laws should be enforced relatively leniently because of the tendency for monopoly power to erode over time is known as the

Correct AnswerverifiedShow Answer

The legal cartel theory indicates that in any industry where market demand and the long-run average total cost curve intersect close to the latter's minimum, government regulation is mandatory and desirable.

Correct AnswerverifiedShow Answer

The U.S.Justice Department, the Federal Trade Commission, state attorneys general, and injured private parties can independently file charges against firms under the Sherman Act.

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