Question 1

Which of the following beliefs is not strongly espoused by the "active antitrust perspective" in policy enforcement?

Accepted Answer

A)   Firms occasionally use illegal tactics to gain over competitors.
B)   Antitrust authorities must act like officials in a football game.
C)   Competition and creative destruction could lead to monopolies.
D)   When competition is insufficient, allocative inefficiencies will occur.E) A) and D)
F) C) and D)

Question 2

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) A) and C)
F) C) and D)

Question 3

A function of the Federal Trade Commission is to

Accepted Answer

A)   investigate instances of faulty and misleading advertising.
B)   establish railway rates for interstate railroads.
C)   ban or recall unsafe consumer products.
D)   prevent insider trading in securities markets.E) B) and C)
F) A) and D)

Question 4

Anticompetitive price discrimination, interlocking directorates, and tying contracts were banned by the

Accepted Answer

A)   Federal Trade Commission Act.
B)   Clayton Act.
C)   Sherman Act.
D)   Celler-Kefauver Act.E) None of the above
F) C) and D)

Question 5

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) A) and B)
F) A) and C)

Question 6

"Behavioralists" in antitrust applications believe that a firm that dominates a market is not necessarily behaving unfairly.

Accepted Answer

A) True 
 B)False

Question 7

Differences in the interpretation and the enforcement of antitrust laws are in part rooted on the issue of focus. One such issue pertains to the question of whether the policy focus should be on

Accepted Answer

A)   domestic firms versus multinationals.
B)   intrastate trade versus interstate trade.
C)   monopoly output versus monopoly pricing
D)   monopoly behavior versus monopoly structure.E) None of the above
F) All of the above

Question 8

Which one of the following is concerned with social regulation?

Accepted Answer

A)   Equal Employment Opportunity Commission
B)   Federal Communications Commission
C)   Sherman Commission
D)   Federal Energy Regulatory CommissionE) B) and C)
F) A) and D)

Question 9

Tying contracts, which is 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) A) and C)

Question 10

Supporters of social regulation contend that it has provided net benefits to society in the form of greater safety, a better environment, and less discrimination.

Accepted Answer

A) True 
 B)False

Question 11

The Clayton Act of 1914

Accepted Answer

A)   outlawed price discrimination, tying contracts, acquisition of stocks of competing corporations, and interlocking directorates that lessen competition.
B)   prohibited unfair or deceptive acts or practices in commerce that tend to reduce competition.
C)   outlawed vertical and conglomerate mergers.
D)   prohibited one firm from acquiring the assets of another when the effect was to limit competition.E) A) and B)
F) C) and D)

Question 12

What is a major characteristic of a natural monopoly?

Accepted Answer

A)   The firm is a single seller of a resource.
B)   It sets price equal to marginal revenue.
C)   There is extensive product advertising.
D)   There is a large range for economies of scale.E) None of the above
F) A) and B)

Question 13

Those who may file antitrust lawsuits against violators of the Sherman Act include the following, except

Accepted Answer

A)   injured private parties.
B)   state attorneys general.
C)   the U.S. Department of Labor.
D)   the U.S. Department of Justice.E) All of the above
F) B) and D)

Question 14

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

Accepted Answer

A)   a conglomerate merger
B)   a vertical merger
C)   a price-fixing arrangement among all the industry firms
D)   a horizontal mergerE) A) and B)
F) A) and C)

Question 15

A caption that could serve as a retort to opponents of social regulation would be

Accepted Answer

A)   "There is no free lunch."
B)   "You can't push on a string."
C)   "Less government is not always better."
D)   "Restraints of trade must be outlawed."E) All of the above
F) A) and B)

Question 16

(Consider This)  According to the Consider This box on catfish and art, which of the following firms were convicted for horizontal price-fixing?

Accepted Answer

A)   Dell and Gateway (personal computer makers) 
B)   Boeing and Airbus (aircraft manufacturers) 
C)   Heinz and Del Monte (food product firms) 
D)   Apple, Harper Collins, and Penguin (e-books) E) B) and C)
F) A) and B)

Question 17

The situation where a single firm can supply the product to an entire market at a lower unit cost than if the market were split among a number of competing firms, is called a

Accepted Answer

A)   dominant firm oligopoly.
B)   structured market.
C)   natural monopoly.
D)   trust.E) A) and D)
F) None of the above

Question 18

If a buyer who wants product A is required by the seller to buy its products B and C as well, this is called

Accepted Answer

A)   an exclusive contract.
B)   profit maximization.
C)   competitive pricing.
D)   a tying contract.E) A) and C)
F) None of the above

Question 19

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

Question 20

The so-called rule of reason in interpreting antitrust legislation suggests that the application of antitrust laws should be based on industry

Accepted Answer

A)   efficiency.
B)   concentration ratios.
C)   behavior.
D)   structure.E) A) and B)
F) None of the above

Exam 21: Antitrust Policy and Regulation

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

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

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Supporters of social regulation contend that it has provided net benefits to society in the form of greater safety, a better environment, and less discrimination.

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"Behavioralists" in antitrust applications believe that a firm that dominates a market is not necessarily behaving unfairly.

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If a buyer who wants product A is required by the seller to buy its products B and C as well, this is called

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The basic purpose of antitrust laws is to

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The so-called rule of reason in interpreting antitrust legislation suggests that the application of antitrust laws should be based on industry

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Differences in the interpretation and the enforcement of antitrust laws are in part rooted on the issue of focus. One such issue pertains to the question of whether the policy focus should be on

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Which one of the following is concerned with social regulation?

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The situation where a single firm can supply the product to an entire market at a lower unit cost than if the market were split among a number of competing firms, is called a

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

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Anticompetitive price discrimination, interlocking directorates, and tying contracts were banned by the

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Those who may file antitrust lawsuits against violators of the Sherman Act include the following, except

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What is a major characteristic of a natural monopoly?

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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

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A caption that could serve as a retort to opponents of social regulation would be

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(Consider This) According to the Consider This box on catfish and art, which of the following firms were convicted for horizontal price-fixing?

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Which of the following beliefs is not strongly espoused by the "active antitrust perspective" in policy enforcement?

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A function of the Federal Trade Commission is to

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The Clayton Act of 1914

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