Question 1

An example of a government organization involved primarily in public regulation or industrial regulation of natural monopolies would be the

Accepted Answer

A)  Food and Drug Administration.
B)  Environmental Protection Agency.
C)  Federal Energy Regulatory Commission.
D)  Occupational Safety and Health Administration.E) A) and D)
F) C) and D)

Question 2

A major criticism of industrial regulation is that

Accepted Answer

A)  it has been applied to virtually all major U.S.corporations in the post-Second World War period.
B)  marginal cost pricing has created an underallocation of resources.
C)  by allowing a fair return price, it gives natural monopolists little incentive to contain costs.
D)  regulatory commissions have frequently caused natural monopolies to go bankrupt.E) All of the above
F) A) and B)

Question 3

In which of the following cases did the final court decision result in a breakup of the firm into competing businesses?

Accepted Answer

A)  Microsoft case
B)  Standard Oil case
C)  U.S.Steel case
D)  DuPont cellophane caseE) B) and D)
F) B) and C)

Question 4

Which one of the following is not prohibited by the original Clayton Act?

Accepted Answer

A)  the purchase of the stocks of rival firms that lessens competition
B)  the purchase of the assets of rival firms that lessens competition
C)  an exclusive dealer or tying agreements that lessen competition
D)  price discrimination that lessens competitionE) B) and D)
F) A) and B)

Question 5

An industry has a single firm and is found to have violated antitrust laws.The government breaks it up into two firms that will share the market equally.The Herfindahl index for this industry would change from

Accepted Answer

A)  100 to 50.
B)  10,000 to 2,500.
C)  100,000 to 50,000.
D)  10,000 to 5,000.E) All of the above
F) A) and D)

Question 6

Which type of merger is most likely to be the focus of antitrust scrutiny and enforcement?

Accepted Answer

A)  conglomerate
B)  horizontal
C)  vertical
D)  naturalE) C) and D)
F) B) and C)

Question 7

Which theory of regulation assumes that the industry wants to be regulated, in order to reduce competition and achieve cartel-like conditions?

Accepted Answer

A)  public interest theory
B)  legal cartel theory
C)  price-fixing theory
D)  public ownership theoryE) All of the above
F) C) and D)

Question 8

The government was successful in gaining an antitrust conviction in the

Accepted Answer

A)  U.S.Steel case.
B)  IBM case.
C)  Alcoa case.
D)  DuPont cellophane case.Topic: Antitrust Policy: Issues and ImpactsE) A) and B)
F) A) and C)

Question 9

Intel's monopoly in the sale of microchips for personal computers would be considered

Accepted Answer

A)  legal by "behavioralists" but illegal by "structuralists."
B)  legal by "behavioralists" and "structuralists."
C)  illegal by "behavioralists" and "structuralists."
D)  illegal by "behavioralists" but legal by "structuralists."E) B) and D)
F) A) and D)

Question 10

Which of the following gave the Federal Trade Commission and the U.S.Justice Department the responsibility to enforce antitrust laws?

Accepted Answer

A)  the Sherman Act
B)  the Wheeler-Lea Act
C)  the Clayton Act
D)  the Federal Trade Commission ActE) B) and C)
F) All of the above

Question 11

(Last Word)  In 2000, Microsoft was fined $2.7 billion for

Accepted Answer

A)  using anticompetitive means to promote its Internet Explorer web browser.
B)  monopolizing the market for word processing software.
C)  conspiring with Netscape and Sun to monopolize the market for Internet browsers.
D)  deliberately pricing Windows 95 and 98 below marginal cost to monopolize the market for operating systems for personal computers.E) A) and B)
F) A) and C)

Question 12

The legislation that prohibited "every contract ...or conspiracy, in restraint of trade and commerce" is the

Accepted Answer

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

Question 13

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) A) and B)
F) All of the above

Question 14

The Federal Trade Commission

Accepted Answer

A)  is empowered to hold public hearings to investigate unfair practices.
B)  prohibits interlocking directorates in interstate industries.
C)  regulates airline fares.
D)  regulates such transportation industries as railroads and trucking.E) A) and C)
F) All of the above

Question 15

The two alternative ways of promoting better outcomes when a natural monopoly exists are

Accepted Answer

A)  subsidy and taxation.
B)  public ownership and regulation.
C)  pricing and incorporation.
D)  breaking and merging.E) B) and C)
F) None of the above

Question 16

Which act sharpened and clarified the provisions of the Sherman Act and sought to outlaw the techniques that firms might use to gain monopoly power?

Accepted Answer

A)  Clayton Act
B)  Wheeler-Lea Act
C)  Celler-Kefauver Act
D)  Federal Trade Commission ActE) B) and D)
F) A) and B)

Question 17

Critics of industrial regulation say that such regulation

Accepted Answer

A)  contributes to X-inefficiency.
B)  benefits small firms at the expense of large firms.
C)  creates insurmountable principal-agent problems.
D)  suffers from the free-rider problem.E) B) and C)
F) A) and D)

Question 18

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 19

The theory of regulation developed to deal with "natural monopolies" is called

Accepted Answer

A)  legal cartel theory.
B)  public interest theory.
C)  potential competition theory.
D)  social regulation theory.E) A) and B)
F) A) and C)

Question 20

The Alcoa case

Accepted Answer

A)  supported the structuralist approach to antitrust.
B)  struck down the treble damages provision of the antitrust laws.
C)  called for federal regulation of any industry with a four-firm concentration ratio in excess of 50 percent.
D)  decision was consistent with a behavioralist approach.E) None of the above
F) A) and B)

Exam 21: Antitrust Policy and Regulation

Which type of merger is most likely to be the focus of antitrust scrutiny and enforcement?

Correct AnswerverifiedShow Answer

The legislation that prohibited "every contract ...or conspiracy, in restraint of trade and commerce" is the

Correct AnswerverifiedShow Answer

The Federal Trade Commission

Correct AnswerverifiedShow Answer

(Last Word) In 2000, Microsoft was fined $2.7 billion for

Correct AnswerverifiedShow Answer

An industry has a single firm and is found to have violated antitrust laws.The government breaks it up into two firms that will share the market equally.The Herfindahl index for this industry would change from

Correct AnswerverifiedShow Answer

Critics of industrial regulation say that such regulation

Correct AnswerverifiedShow Answer

An example of a government organization involved primarily in public regulation or industrial regulation of natural monopolies would be the

Correct AnswerverifiedShow Answer

The government was successful in gaining an antitrust conviction in the

Correct AnswerverifiedShow Answer

Which one of the following is not prohibited by the original Clayton Act?

Correct AnswerverifiedShow Answer

Which of the following gave the Federal Trade Commission and the U.S.Justice Department the responsibility to enforce antitrust laws?

Correct AnswerverifiedShow Answer

Which theory of regulation assumes that the industry wants to be regulated, in order to reduce competition and achieve cartel-like conditions?

Correct AnswerverifiedShow Answer

Which act sharpened and clarified the provisions of the Sherman Act and sought to outlaw the techniques that firms might use to gain monopoly power?

Correct AnswerverifiedShow Answer

Intel's monopoly in the sale of microchips for personal computers would be considered

Correct AnswerverifiedShow Answer

The Alcoa case

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The theory of regulation developed to deal with "natural monopolies" is called

Correct AnswerverifiedShow Answer

The two alternative ways of promoting better outcomes when a natural monopoly exists are

Correct AnswerverifiedShow Answer

A major criticism of industrial regulation is that

Correct AnswerverifiedShow Answer

The "rule of reason" indicated that

Correct AnswerverifiedShow Answer

In which of the following cases did the final court decision result in a breakup of the firm into competing businesses?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified