Question 1

Which of the following does not necessarily violate antitrust laws?

Accepted Answer

A)  deceptive advertising
B)  price discrimination
C)  price-fixing
D)  interlocking directoratesE) C) and D)
F) B) and C)

Question 2

Government regulation concerning the conditions under which goods are produced, the impact of production on society, and the physical qualities of the goods is known as

Accepted Answer

A)  industrial regulation.
B)  social regulation.
C)  economic regulation.
D)  antitrust regulation.E) B) and C)
F) A) and B)

Question 3

The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. The Herfindahl index for Alpha is

Accepted Answer

A)  2,600.
B)  100.
C)  2,500.
D)  5,000.E) A) and D)
F) B) and D)

Question 4

In the U.S. Steel case, the court ruled that

Accepted Answer

A)  even though a firm's behavior might be legal, the mere possession of monopoly power was in violation of the Sherman Act.
B)  only monopolies that unreasonably restrain trade are subject to antitrust action under the Sherman Act.
C)  when made by dominant firms, tying contracts are illegal, per se.
D)  the company violated the Clayton Act and therefore should be dissolved into several competing firms.E) A) and D)
F) B) and D)

Question 5

The merger of a firm in one industry with another firm in the same industry that sells similar products is called a

Accepted Answer

A)  vertical merger.
B)  secondary merger.
C)  horizontal merger.
D)  conglomerate merger.E) C) and D)
F) None of the above

Question 6

Most economists agree that, overall, U.S. antitrust policy has been most successful in

Accepted Answer

A)  promoting competition and efficiency.
B)  remedying existing anticompetitive behavior.
C)  deterring price-fixing and anticompetitive mergers.
D)  breaking up monopolies.E) B) and C)
F) A) and D)

Question 7

Which of the following is correct?

Accepted Answer

A)  Vertical mergers are more likely to be acceptable under antitrust laws than are horizontal mergers.
B)  A vertical merger entails the merging of two or more competing firms.
C)  Horizontal mergers are more likely to be acceptable under antitrust laws than are vertical mergers.
D)  Conglomerate mergers occur when two or more firms at various stages in a good's production are combined.E) A) and C)
F) None of the above

Question 8

Critics of social regulation would argue that it

Accepted Answer

A)  decreases prices.
B)  increases output.
C)  increases competition.
D)  decreases product innovation.E) C) and D)
F) All of the above

Question 9

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 C)
F) A) and B)

Question 10

Proposed ergonomics regulations are an example of industrial regulation (rather than social regulation).

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  monopoly structure is a sufficient basis for breaking up monopolies.
B)  only firms behaving as monopolists should be broken up.
C)  a laissez-faire perspective on antitrust is sufficient.
D)  an active antitrust policy is required.E) A) and D)
F) B) and C)

Question 12

What is a natural monopoly? List the two possible alternatives for promoting better economic outcomes where natural monopoly exists.

Accepted Answer

A natural monopoly exists when economies...

Question 13

Suppose the courts declare that XYZ Corporation violated the antitrust laws and as a result ABC Corporation lost $200 million of profits. XYZ Corporation will have to pay ABC Corporation a monetary award of

Accepted Answer

A)  $200 million.
B)  $66.7 million.
C)  $300 million.
D)  $600 million.E) All of the above
F) B) and C)

Question 14

The "rule of reason" indicated that

Accepted Answer

A)  if less than four firms account for three-fourths of an industry's sales, the industry is in violation of the Sherman Act.
B)  social regulation should not be enforced unreasonably so that costs exceed benefits.
C)  the mere possession of monopoly power is a violation of the antitrust laws.
D)  only contracts and combinations that unreasonably restrain trade violate the antitrust laws.E) B) and C)
F) None of the above

Question 15

What is most likely to happen as the output of a natural monopoly increases over the range of market demand?

Accepted Answer

A)  There is a small decrease in average total cost and then it increases as output increases.
B)  There is an increase in average total cost and then it decreases as output increases.
C)  Average total cost increases as output increases.
D)  Average total cost decreases as output increases.E) A) and B)
F) None of the above

Question 16

How effective have antitrust laws been in breaking up existing monopolies?

Accepted Answer

Citing the rule of reason, the governmen...

Question 17

Anticompetitive mergers are illegal under provisions of the Clayton Act (as amended).

Accepted Answer

A) True 
 B)False

Question 18

In which of the following sets of antitrust cases did the government gain convictions?

Accepted Answer

A)  the U.S. Steel case and the Microsoft case
B)  the Alcoa case and the Microsoft case
C)  the DuPont cellophane case and the AT&T case
D)  the U.S. Steel case and the Alcoa caseE) All of the above
F) A) and B)

Question 19

Why has one presidential administration enforced the antitrust laws more or less strictly than another?

Accepted Answer

The main reason is differences in politi...

Question 20

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

Accepted Answer

A)  a horizontal merger between two of the industry's largest firms
B)  a vertical merger between one of an industry's largest firms and one of the many input suppliers in the resource market
C)  a conglomerate merger involving one of the industry's major firms
D)  an agreement by all the industry firms to divide up the market among themE) A) and B)
F) B) and D)

Exam 21: Antitrust Policy and Regulation

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

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

What is a natural monopoly? List the two possible alternatives for promoting better economic outcomes where natural monopoly exists.

Correct AnswerverifiedA natural monopoly exists when economies...View AnswerShow Answer

Most economists agree that, overall, U.S. antitrust policy has been most successful in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is most likely to happen as the output of a natural monopoly increases over the range of market demand?

Correct AnswerverifiedShow Answer

The "rule of reason" indicated that

Correct AnswerverifiedShow Answer

The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. The Herfindahl index for Alpha is

Correct AnswerverifiedShow Answer

Government regulation concerning the conditions under which goods are produced, the impact of production on society, and the physical qualities of the goods is known as

Correct AnswerverifiedShow Answer

Anticompetitive mergers are illegal under provisions of the Clayton Act (as amended).

Correct AnswerverifiedShow Answer

A criticism of social regulation is that it

Correct AnswerverifiedShow Answer

Proposed ergonomics regulations are an example of industrial regulation (rather than social regulation).

Correct AnswerverifiedShow Answer

In the U.S. Steel case, the court ruled that

Correct AnswerverifiedShow Answer

Critics of social regulation would argue that it

Correct AnswerverifiedShow Answer

Which of the following does not necessarily violate antitrust laws?

Correct AnswerverifiedShow Answer

In which of the following sets of antitrust cases did the government gain convictions?

Correct AnswerverifiedShow Answer

The merger of a firm in one industry with another firm in the same industry that sells similar products is called a

Correct AnswerverifiedShow Answer

Why has one presidential administration enforced the antitrust laws more or less strictly than another?

Correct AnswerverifiedThe main reason is differences in politi...View AnswerShow Answer

Suppose the courts declare that XYZ Corporation violated the antitrust laws and as a result ABC Corporation lost $200 million of profits. XYZ Corporation will have to pay ABC Corporation a monetary award of

Correct AnswerverifiedShow Answer

How effective have antitrust laws been in breaking up existing monopolies?

Correct AnswerverifiedCiting the rule of reason, the governmen...View AnswerShow Answer

Correct Answer
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A natural monopoly exists when economies...
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The main reason is differences in politi...
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Correct Answer
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Correct Answer
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Citing the rule of reason, the governmen...
View Answer