Question 1

The public interest theory of regulation stipulates that government regulation of a natural monopoly is necessary in order to achieve all of the following, except

Accepted Answer

A)  preventing the natural monopoly from harming society through its monopoly pricing.
B)  garnering for society at least part of the cost reductions from being a natural monopoly.
C)  avoiding the reduction in output associated with monopoly power.
D)  eventually breaking up the monopoly to achieve competition within the industry.E) C) and D)
F) None of the above

Question 2

Social regulation

Accepted Answer

A)  was developed as a substitute for industrial regulation.
B)  has declined in importance in recent years.
C)  applies more broadly and affects more people than industrial regulation.
D)  is more concerned with the overall standard of living of society rather than with details of production processes.E) A) and B)
F) A) and C)

Question 3

The U.S. Steel case of 1920 and the Alcoa case of 1945 dealt with which antitrust question?

Accepted Answer

A)  To what extent should firms be limited in buying plant and equipment from other firms?
B)  Should an industry be judged by its behavior or by its structure?
C)  Should the steel and aluminum industries be considered natural monopolies?
D)  Should mergers be permitted between firms in closely related industries?E) B) and D)
F) C) and D)

Question 4

The Sherman Act of 1890 outlawed

Accepted Answer

A)  monopoly pricing and foreign trade.
B)  price discrimination and monopoly profits.
C)  restraint of trade and monopolization.
D)  foreign trade and monopolization.E) B) and C)
F) B) and D)

Question 5

Which of the following is most likely to be a natural monopoly?

Accepted Answer

A)  aircraft manufacturing
B)  auto manufacturing
C)  electric utilities
D)  steel productionE) B) and C)
F) C) and D)

Question 6

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 7

What is social regulation? As a federal social agency, what is the jurisdiction of the Food and Drug Administration (FDA)?

Accepted Answer

Social regulation is government regulati...

Question 8

Government regulation of firms' prices or "rates" in selected industries is the focus of

Accepted Answer

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

Question 9

A merger between a maker of household detergents and a fast-food chain would be an example of

Accepted Answer

A)  a horizontal merger.
B)  an interlocking directorate.
C)  a conglomerate merger.
D)  a tying contract.E) None of the above
F) A) and B)

Question 10

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 D)
F) None of the above

Question 11

Describe the three types of mergers and give real-world examples.

Accepted Answer

A horizontal merger occurs between two c...

Question 12

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) All of the above

Question 13

Using the Internet, some firms are now employing software that uses pricing algorithms to constantly adjust their online prices in response to what rivals are charging for similar products. This is making it easier for the

Accepted Answer

A)  firms to collude tacitly in their pricing schemes.
B)  government to prove price-fixing.
C)  firms to gain monopoly power over their rivals.
D)  government to enforce industrial regulation.E) All of the above
F) A) and B)

Question 14

Tying contracts, which are prohibited under the Clayton Act, refers to the situation where a producer requires that a buyer

Accepted Answer

A)  can resell the product but only at a higher price than the original purchase price.
B)  cannot buy a similar product from other producers if that buyer wants to continue buying its product.
C)  buy another of its products as a condition for buying the desired product.
D)  cannot ever resell the product bought.E) A) and B)
F) B) and C)

Question 15

Describe the Wheeler-Lea Act of 1938 and name the company and the amount of that company's fine for their 2016 violation of this act.

Accepted Answer

The Wheeler-Lea Act of 1938 amended the ...

Question 16

In recent years, the strictest application of antitrust laws has been for

Accepted Answer

A)  breaking up firms with monopoly power.
B)  prosecuting firms for price-fixing activity.
C)  blocking vertical mergers.
D)  limiting foreign competition.E) None of the above
F) B) and C)

Question 17

The Consumer Product Safety Commission engages in social regulation, rather than industrial regulation.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is directly illegal under the Sherman Act?

Accepted Answer

A)  price discrimination
B)  tying contracts
C)  price-fixing
D)  interlocking directoratesE) A) and D)
F) B) and D)

Question 19

In the U.S. Steel case of 1920, the courts held that

Accepted Answer

A)  the structure of an industry is more important than its behavior in determining violations of the antitrust laws.
B)  any firm that faces substantial import competition is exempt from the antitrust laws.
C)  although U.S. Steel possessed monopoly power, it had not violated the Sherman Act because it had not unreasonably used that power.
D)  the fact that U.S. Steel possessed monopoly power was a violation of the Sherman Act.E) All of the above
F) A) and B)

Question 20

A 2000 ruling by a Federal court found that Microsoft, with its very popular Windows operating system,

Accepted Answer

A)  controlled 95 percent of the PC operating system market and thus was an illegal monopoly.
B)  used anticompetitive practices to maintain and broaden its monopoly power.
C)  illegally lobbied members of Congress to obtain monopoly patents.
D)  conspired to fix prices on its Windows software.E) A) and B)
F) None of the above

Exam 21: Antitrust Policy and Regulation

Using the Internet, some firms are now employing software that uses pricing algorithms to constantly adjust their online prices in response to what rivals are charging for similar products. This is making it easier for the

Correct AnswerverifiedShow Answer

The Sherman Act of 1890 outlawed

Correct AnswerverifiedShow Answer

A 2000 ruling by a Federal court found that Microsoft, with its very popular Windows operating system,

Correct AnswerverifiedShow Answer

Which of the following is directly illegal under the Sherman Act?

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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.

Correct AnswerverifiedShow Answer

Social regulation

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Which of the following is mainly involved in social regulation?

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The Consumer Product Safety Commission engages in social regulation, rather than industrial regulation.

Correct AnswerverifiedShow Answer

What is social regulation? As a federal social agency, what is the jurisdiction of the Food and Drug Administration (FDA)?

Correct AnswerverifiedSocial regulation is government regulati...View AnswerShow Answer

Tying contracts, which are prohibited under the Clayton Act, refers to the situation where a producer requires that a buyer

Correct AnswerverifiedShow Answer

The basic purpose of antitrust laws is to

Correct AnswerverifiedShow Answer

The U.S. Steel case of 1920 and the Alcoa case of 1945 dealt with which antitrust question?

Correct AnswerverifiedShow Answer

In the U.S. Steel case of 1920, the courts held that

Correct AnswerverifiedShow Answer

A merger between a maker of household detergents and a fast-food chain would be an example of

Correct AnswerverifiedShow Answer

Describe the three types of mergers and give real-world examples.

Correct AnswerverifiedA horizontal merger occurs between two c...View AnswerShow Answer

The public interest theory of regulation stipulates that government regulation of a natural monopoly is necessary in order to achieve all of the following, except

Correct AnswerverifiedShow Answer

Describe the Wheeler-Lea Act of 1938 and name the company and the amount of that company's fine for their 2016 violation of this act.

Correct AnswerverifiedThe Wheeler-Lea Act of 1938 amended the ...View AnswerShow Answer

Which of the following is most likely to be a natural monopoly?

Correct AnswerverifiedShow Answer

In recent years, the strictest application of antitrust laws has been for

Correct AnswerverifiedShow Answer

Government regulation of firms' prices or "rates" in selected industries is the focus of

Correct AnswerverifiedShow Answer

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Social regulation is government regulati...
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A horizontal merger occurs between two c...
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The Wheeler-Lea Act of 1938 amended the ...
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