Question 1

Price fixing is the practice of charging the same price for a product to all customers.

Accepted Answer

A) True 
 B)False

Question 2

Should the government try to prevent a merger that would enable the resultant firm to produce at a more efficient scale of production?

Accepted Answer

Though a horizontal merger may enable ou...

Question 3

Suppose that Industry A has two firms of the same size and Industry B has three firms with 65 percent,30 percent,and 5 percent market shares,respectively.Which of the following is true of the Herfindahl-Hirschman indexes for the two industries?

Accepted Answer

A)  The HHI for Industry A is 50 higher than the HHI for Industry B.
B)  The HHI for Industry A is 50 lower than the HHI for Industry B.
C)  The HHI for Industry A is 150 higher than the HHI for Industry B.
D)  The HHI for Industry A is 150 lower than the HHI for Industry B.
E)  The HHI is the same for both industries.F) A) and E)
G) B) and E)

Question 4

Regulation of a natural monopoly could give an economy the advantages of

Accepted Answer

A)  one-firm efficiency without competition-like behavior.
B)  competition-like behavior but not one-firm efficiency.
C)  one-firm efficiency and competition-like behavior.
D)  neither one-firm efficiency nor competition-like behavior.
E)  dealing with only one firm rather than many firms as in perfect competition.F) None of the above
G) All of the above

Question 5

A business practice is deemed illegal under the per se rule when the court decision is made without regard to the practice's economic rationale or consequences.

Accepted Answer

A) True 
 B)False

Question 6

Which two products most likely will have market structures that are natural monopolies?

Accepted Answer

A)  Computers and natural gas
B)  Automobiles and cable television
C)  Groceries and toys
D)  Airplanes and ships
E)  Water and electricityF) A) and B)
G) A) and C)

Question 7

Regarding the provision of a public utility like water,

Accepted Answer

A)  many small firms can deliver the water to households most efficiently.
B)  a state-owned firm can deliver the water to households most efficiently.
C)  two firms can deliver the water to households most efficiently.
D)  a few large firms can deliver the water to households most efficiently.
E)  one firm can deliver the water to households most efficiently.F) A) and B)
G) A) and D) E

Question 8

There is more controversy among economists about the effects of vertical restraints than the effects of horizontal restraints.

Accepted Answer

A) True 
 B)False

Question 9

When two or more firms conspire to fix prices,they do something

Accepted Answer

A)  anticompetitive but legal.
B)  competitive but illegal.
C)  illegal and anticompetitive.
D)  legal and competitive.
E)  that increases profits of major producers in the market.F) C) and D)
G) A) and E)

Question 10

Price fixing is illegal under the per se rule outlined in Section 1 of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following gives the government the authority to take action against price fixing?

Accepted Answer

A)  Section 1 of the Sherman Act
B)  Section 2 of the Sherman Act
C)  The Clayton Act
D)  The Glass-Steagall Act
E)  The Federal Trade Commission ActF) A) and D)
G) C) and D)

Question 12

The Justice Department and Federal Trade Commission use the Herfindahl-Hirschman index because it indicates how likely it is that,after a merger,firms in an industry will

Accepted Answer

A)  have enough market power to raise prices well above marginal cost.
B)  have enough market power to use predatory pricing.
C)  consider setting prices jointly.
D)  increase output.
E)  increase economic efficiency.F) B) and C)
G) D) and E)

Question 13

Price fixing is illegal in the United States.

Accepted Answer

A) True 
 B)False

Question 14

Most economists agree that resale price maintenance reduces economic efficiency.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following gives the government the authority to take action in breaking up an existing monopoly?

Accepted Answer

A)  Section 1 of the Sherman Act
B)  Section 2 of the Sherman Act
C)  The Clayton Act
D)  The Glass-Steagall Act
E)  The Federal Trade Commission ActF) A) and C)
G) A) and D)

Question 16

Economists who complain about airline deregulation say that

Accepted Answer

A)  there is too much competition in large regional airline hubs.
B)  fares have increased on all major routes in the country.
C)  it has reduced competition between St.Louis and Kansas City.
D)  rural areas no longer receive the service they previously received.
E)  the increased number of planes in the sky is unsafe.F) B) and D)
G) A) and E) D

Question 17

A 1,000-point change in the Herfindahl-Hirschman index corresponds roughly to a merger of two firms,each with a 7 percent share of the market.

Accepted Answer

A) True 
 B)False

Question 18

There is reason to regulate the prices of firms in industries that

Accepted Answer

A)  are strategically important to the country.
B)  are natural monopolies.
C)  have potential external costs for the country as a whole.
D)  are usually regulated by regulatory authorities.
E)  produce public goods.F) All of the above
G) A) and D) B

Question 19

Frequently in American economic history,the government has regulated a firm's prices

Accepted Answer

A)  even when it is farfetched to think of the firm as a natural monopoly.
B)  to force a firm to face intense competition at the beginning stages of its existence.
C)  to prevent international competition from capturing a market.
D)  to raise government revenue.
E)  to lower the cost of living.F) B) and C)
G) D) and E)

Question 20

Since 1890,the government has ordered the breakup of

Accepted Answer

A)  Standard Oil.
B)  Pacific Bell.
C)  Coca-Cola.
D)  IBM.
E)  General Motors.F) A) and E)
G) A) and D)

Exam 12: Antitrust Policy and Regulation

Price fixing is the practice of charging the same price for a product to all customers.

Correct AnswerverifiedShow Answer

Should the government try to prevent a merger that would enable the resultant firm to produce at a more efficient scale of production?

Correct AnswerverifiedThough a horizontal merger may enable ou...View AnswerShow Answer

Suppose that Industry A has two firms of the same size and Industry B has three firms with 65 percent,30 percent,and 5 percent market shares,respectively.Which of the following is true of the Herfindahl-Hirschman indexes for the two industries?

Correct AnswerverifiedShow Answer

Regulation of a natural monopoly could give an economy the advantages of

Correct AnswerverifiedShow Answer

A business practice is deemed illegal under the per se rule when the court decision is made without regard to the practice's economic rationale or consequences.

Correct AnswerverifiedShow Answer

Which two products most likely will have market structures that are natural monopolies?

Correct AnswerverifiedShow Answer

Regarding the provision of a public utility like water,

Correct AnswerverifiedE

There is more controversy among economists about the effects of vertical restraints than the effects of horizontal restraints.

Correct AnswerverifiedShow Answer

When two or more firms conspire to fix prices,they do something

Correct AnswerverifiedShow Answer

Price fixing is illegal under the per se rule outlined in Section 1 of the Sherman Act.

Correct AnswerverifiedShow Answer

Which of the following gives the government the authority to take action against price fixing?

Correct AnswerverifiedShow Answer

The Justice Department and Federal Trade Commission use the Herfindahl-Hirschman index because it indicates how likely it is that,after a merger,firms in an industry will

Correct AnswerverifiedShow Answer

Price fixing is illegal in the United States.

Correct AnswerverifiedShow Answer

Most economists agree that resale price maintenance reduces economic efficiency.

Correct AnswerverifiedShow Answer

Which of the following gives the government the authority to take action in breaking up an existing monopoly?

Correct AnswerverifiedShow Answer

Economists who complain about airline deregulation say that

Correct AnswerverifiedD

A 1,000-point change in the Herfindahl-Hirschman index corresponds roughly to a merger of two firms,each with a 7 percent share of the market.

Correct AnswerverifiedShow Answer

There is reason to regulate the prices of firms in industries that

Correct AnswerverifiedB

Frequently in American economic history,the government has regulated a firm's prices

Correct AnswerverifiedShow Answer

Since 1890,the government has ordered the breakup of

Correct AnswerverifiedShow Answer

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Though a horizontal merger may enable ou...
View Answer

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E

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D

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B

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