Question 1

In the Alcoa case of 1945,the courts held that:

Accepted Answer

A)   the mere possession of monopoly power is a violation of the antitrust laws.
B)   only contracts and combinations that unreasonably restrain trade are in violation of the Sherman Act.
C)   retail and wholesale firms are exempt from antitrust legislation.
D)   firms that sell more than one-half of their output overseas are exempt from antitrust.E) A) and D)
F) A) and B)

Question 2

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 case.E) B) and D)
F) All of the above

Question 3

The Celler-Kefauver Act made vertical mergers legal,provided each firm does not have more than 30 percent of its relevant market.

Accepted Answer

A) True 
 B)False

Question 4

All of the following can file antitrust charges under the Sherman Act except:

Accepted Answer

A)   the U.S.Justice Department.
B)   state attorneys general.
C)   injured private parties.
D)   the Federal Energy Regulatory Commission.E) C) and D)
F) B) and C)

Question 5

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 D)
F) B) and C)

Question 6

Suppose the firms in a five-firm industry have market shares of 30,30,20,10,and 10 percent,respectively.The Herfindahl index for the industry is:

Accepted Answer

A)   1,900.
B)   2,400.
C)   90.
D)   10,000.E) All of the above
F) C) and D)

Question 7

Suppose that two firms in an industry with a Herfindahl index of 5,000 announce a merger.The U.S.Justice Department concludes the merger will boost the index to 5,500.The antitrust authorities will most likely:

Accepted Answer

A)   ignore this merger because of the relatively small increase in the Herfindahl index.
B)   allow the merger but watch the new firm carefully for future violations of the antitrust laws.
C)   allow the merger if foreign entry to the industry is possible.
D)   prevent the merger,contending that it violates the Clayton Act.E) A) and D)
F) None of the above

Question 8

The main purpose of industrial regulation is to:

Accepted Answer

A)   lower price to marginal cost.
B)   lower price to average total cost such that the firm earns a fair return.
C)   break monopolies into competing firms.
D)   reduce X-inefficiency.E) All of the above
F) A) and B)

Question 9

A firm charged with monopolizing a market is less likely to be convicted if:

Accepted Answer

A)   the court accepts a broad definition of the market.
B)   the court accepts a narrow definition of the market.
C)   it has gained its monopoly through abusive means.
D)   it sells its product to other firms,rather than directly to consumers.E) A) and B)
F) A) and C)

Question 10

The view that the antitrust laws need to be strongly enforced to prevent illegal business behaviors,monopolization of markets,and allocative inefficiency 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) A) and C)
F) C) and D)

Question 11

The Celler-Kefauver Act outlawed interlocking directorates.

Accepted Answer

A) True 
 B)False

Question 12

Price-fixing is considered to be a per se violation of the antitrust laws because:

Accepted Answer

A)   a guilty verdict requires proof of injury to consumers.
B)   a guilty verdict requires proof of injury to other competitors.
C)   the rule of reason is applicable.
D)   a guilty verdict need only show that there was a conspiracy to fix prices,not that it succeeded.E) A) and C)
F) A) and B)

Question 13

(Consider This) The Consider This box "Of Catfish and Art (and Other Things in Common) " lists examples of recent antitrust cases involving:

Accepted Answer

A)   monopolization.
B)   tying contracts.
C)   price-fixing.
D)   horizontal mergers.E) A) and B)
F) A) and C)

Question 14

The regulation of natural monopolies has been criticized because it creates a tendency for regulated firms to use too much labor and too little capital in the production process.

Accepted Answer

A) True 
 B)False

Question 15

A conglomerate merger:

Accepted Answer

A)   can extend the line of products sold,extend the territories in which products are sold,or combine totally unrelated products.
B)   is defined as a merger involving two firms that previously had a buyer-seller relationship.
C)   is defined as a merger involving two firms producing the same or similar products and selling them in the same geographical market.
D)   is illegal,per se.E) B) and D)
F) A) and D)

Question 16

The optimal amount of social regulation occurs where the marginal benefit of such regulation:

Accepted Answer

A)   equals the marginal cost.
B)   exceeds the marginal cost by the greatest amount.
C)   is zero.
D)   is at its maximum.E) B) and D)
F) None of the above

Question 17

Answer the question on the basis of the following table showing market shares of firms in hypothetical industries.Assume these are distinct industries with no buyer-seller relationships or competition among them.   Market Share of Firms in Industry \begin{array}{c}&&	ext { Market Share of Firms in Industry }\end{array}​​ Market Share of Firms in Industry ​ 
 IndustryAlphaBetaCappaDelta12345630302020−−−−8010531125252525−−−−202020201010\begin{array}{c}\begin{array}{lll}\Industry\Alpha\Beta\Cappa\Delta\\end{array}\begin{array}{lll}\1&2&3&4&5&6\30&30&20&20&--&--\80&10&5&3&1&1\25&25&25&25&--&--\20&20&20&20&10&10\end{array}\end{array}IndustryAlphaBetaCappaDelta​130802520​230102520​32052520​42032520​5−−1−−10​6−−1−−10​​  Refer to the table.The Herfindahl index for Cappa is:

Accepted Answer

A)   2,500.
B)   100.
C)   100,000.
D)   5,000. E) None of the above
F) All of the above

Question 18

Price-fixing:

Accepted Answer

A)   is prohibited by Section 7 of the Clayton Act.
B)   is a per se violation of the antitrust laws.
C)   may be either legal or illegal depending on whether or not it produces above-normal profits.
D)   is illegal under terms of the Federal Trade Commission Act.E) B) and C)
F) A) and B)

Question 19

Conspiracies to fix prices are:

Accepted Answer

A)   illegal under the Clayton Act.
B)   illegal under the Celler-Kefauver Act.
C)   per se violations of the antitrust laws.
D)   more tolerated by government today than two or three decades ago.E) A) and C)
F) B) and C)

Question 20

(Last Word) In 2001,Microsoft was found guilty of:

Accepted Answer

A)   using anticompetitive means to maintain and broaden its "Windows" monopoly.
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) All of the above
F) A) and C)

Exam 20: Antitrust Policy and Regulation

The view that the antitrust laws need to be strongly enforced to prevent illegal business behaviors,monopolization of markets,and allocative inefficiency is known as the:

Correct Answer
verified

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

Correct Answer
verified

The main purpose of industrial regulation is to:

Correct Answer
verified

Suppose that two firms in an industry with a Herfindahl index of 5,000 announce a merger.The U.S.Justice Department concludes the merger will boost the index to 5,500.The antitrust authorities will most likely:

Correct Answer
verified

In the Alcoa case of 1945,the courts held that:

Correct Answer
verified

(Last Word) In 2001,Microsoft was found guilty of:

Correct Answer
verified

All of the following can file antitrust charges under the Sherman Act except:

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Price-fixing is considered to be a per se violation of the antitrust laws because:

Correct Answer
verified

The Celler-Kefauver Act outlawed interlocking directorates.

Correct Answer
verified

(Consider This) The Consider This box "Of Catfish and Art (and Other Things in Common) " lists examples of recent antitrust cases involving:

Correct Answer
verified

A firm charged with monopolizing a market is less likely to be convicted if:

Correct Answer
verified

A conglomerate merger:

Correct Answer
verified

Conspiracies to fix prices are:

Correct Answer
verified

Suppose the firms in a five-firm industry have market shares of 30,30,20,10,and 10 percent,respectively.The Herfindahl index for the industry is:

Correct Answer
verified

The optimal amount of social regulation occurs where the marginal benefit of such regulation:

Correct Answer
verified

Price-fixing:

Correct Answer
verified

The Celler-Kefauver Act made vertical mergers legal,provided each firm does not have more than 30 percent of its relevant market.

Correct Answer
verified

The regulation of natural monopolies has been criticized because it creates a tendency for regulated firms to use too much labor and too little capital in the production process.

Correct Answer
verified

Exam 20: Antitrust Policy and Regulation

The view that the antitrust laws need to be strongly enforced to prevent illegal business behaviors,monopolization of markets,and allocative inefficiency is known as the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The main purpose of industrial regulation is to:

Correct AnswerverifiedShow Answer

Suppose that two firms in an industry with a Herfindahl index of 5,000 announce a merger.The U.S.Justice Department concludes the merger will boost the index to 5,500.The antitrust authorities will most likely:

Correct AnswerverifiedShow Answer

In the Alcoa case of 1945,the courts held that:

Correct AnswerverifiedShow Answer

(Last Word) In 2001,Microsoft was found guilty of:

Correct AnswerverifiedShow Answer

All of the following can file antitrust charges under the Sherman Act except:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Price-fixing is considered to be a per se violation of the antitrust laws because:

Correct AnswerverifiedShow Answer

The Celler-Kefauver Act outlawed interlocking directorates.

Correct AnswerverifiedShow Answer

(Consider This) The Consider This box "Of Catfish and Art (and Other Things in Common) " lists examples of recent antitrust cases involving:

Correct AnswerverifiedShow Answer

A firm charged with monopolizing a market is less likely to be convicted if:

Correct AnswerverifiedShow Answer

A conglomerate merger:

Correct AnswerverifiedShow Answer

Conspiracies to fix prices are:

Correct AnswerverifiedShow Answer

Suppose the firms in a five-firm industry have market shares of 30,30,20,10,and 10 percent,respectively.The Herfindahl index for the industry is:

Correct AnswerverifiedShow Answer

The optimal amount of social regulation occurs where the marginal benefit of such regulation:

Correct AnswerverifiedShow Answer

Price-fixing:

Correct AnswerverifiedShow Answer

The Celler-Kefauver Act made vertical mergers legal,provided each firm does not have more than 30 percent of its relevant market.

Correct AnswerverifiedShow Answer

The regulation of natural monopolies has been criticized because it creates a tendency for regulated firms to use too much labor and too little capital in the production process.

Correct AnswerverifiedShow Answer

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