Question 1

Where there is natural monopoly, government is most likely to implement

Accepted Answer

A)   social regulation.
B)   antitrust policy.
C)   industrial regulation.
D)   an externality containment policy.E) All of the above
F) None of the above

Question 2

(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) B) and D)
F) B) and C)

Question 3

An industry has five firms, each with a market share of 20 percent. There is no foreign competition, entry into the industry is difficult, and no firm is on the verge of bankruptcy. If two of the firms in the industry seek to merge, this action would most likely be opposed by the government because the Herfindahl index for the industry is

Accepted Answer

A)   2,000 and the merger would increase the index by 500.
B)   2,000 and the merger would increase the index by 800.
C)   2,500 and the merger would increase the index by 500.
D)   2,500 and the merger would increase the index by 1,200.E) None of the above
F) B) and C)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Tying agreements

Accepted Answer

A)   establish common boards of directors for previously competing firms.
B)   obligate a purchaser of product X to also buy product Y from the same seller.
C)   allow manufacturers to specify the retail prices of their products.
D)   prohibit firms from selling their products outside of specified geographic areas.E) None of the above
F) A) and D)

Question 6

Suppose that you own a toy store and want to buy 100 talking robots. Your supplier will sell you the robots only if you also agree to buy 200 dolls. This is an illegal practice called

Accepted Answer

A)   monopolistic.
B)   a tying contract.
C)   a cartel.
D)   discriminatory.E) A) and D)
F) B) and D)

Question 7

The main purpose of the antitrust laws is

Accepted Answer

A)   to encourage firms to produce where P > MC.
B)   to eliminate both negative and positive externalities.
C)   to prevent the monopolization of industries.
D)   to regulate natural monopolies.E) All of the above
F) B) and C)

Question 8

Per se violations in antitrust law refer to

Accepted Answer

A)   activities that are illegal in and of themselves.
B)   violations that are alleged but not yet proven.
C)   cases that are subject to the rule of reason.
D)   antitrust cases that are pending resolution.E) A) and C)
F) A) and D)

Question 9

A merger between one firm and another firm that is its supplier is known as a

Accepted Answer

A)   horizontal merger.
B)   vertical merger.
C)   conglomerate merger.
D)   parallel merger.E) B) and C)
F) A) and B)

Question 10

The argument that a large firm dominating an industry will not necessarily act like a monopolist, as expressed in the 1920 U.S. Steel case, suggests that the application of antitrust laws should be based on firm

Accepted Answer

A)   behavior.
B)   structure.
C)   efficiency.
D)   concentration ratios.E) All of the above
F) A) and D)

Question 11

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

Question 12

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

Question 13

The legal cartel theory indicates that in any industry where market demand and the long-run average total cost curve intersect close to the latter's minimum, government regulation is mandatory and desirable.

Accepted Answer

A) True 
 B)False

Question 14

In which of the following cases was the firm found not guilty of violating the Sherman Act?

Accepted Answer

A)   Standard Oil case
B)   Microsoft case
C)   Alcoa case
D)   DuPont cellophane caseE) A) and C)
F) A) and B)

Question 15

Which of the following findings would be the most likely to lead the U.S. Justice Department to block a corporate merger under terms of the Clayton Act?

Accepted Answer

A)   a buyer-seller relationship between the two firms
B)   a high premerger Herfindahl index in the industry and a large boost in the index because of the merger
C)   a low pre- and postmerger concentration ratio in the industry
D)   evidence that one of the firms is highly unprofitableE) B) and C)
F) A) and C)

Question 16

Which of the following U.S. Supreme Court cases ruled that only monopolies that "unreasonably restrain trade" are violating antitrust laws?

Accepted Answer

A)   DuPont cellophane case of 1956
B)   U.S. Steel case of 1920
C)   Alcoa case of 1945
D)   AT&T case of 1982E) All of the above
F) B) and C)

Question 17

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) C) and D)

Question 18

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

Question 19

In which of the following pairs of antitrust cases did the firms prevail against the antitrust charges leveled against them?

Accepted Answer

A)   the Alcoa case and the Microsoft case
B)   the U.S. Steel case and the Alcoa case
C)   the DuPont cellophane case and the U.S. Steel case
D)   the U.S. Steel case and the Microsoft caseE) B) and D)
F) None of the above

Question 20

The decision in the U.S. Steel case

Accepted Answer

A)   reflected a behavioralist approach to antitrust.
B)   reflected a structuralist approach to antitrust.
C)   divided U.S. Steel into a number of smaller companies.
D)   ruled that U.S. Steel had engaged in illegal price-fixing.E) A) and C)
F) None of the above

Exam 21: Antitrust Policy and Regulation

(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 criticism of social regulation is that it

Correct Answer
verified

Where there is natural monopoly, government is most likely to implement

Correct Answer
verified

Suppose that you own a toy store and want to buy 100 talking robots. Your supplier will sell you the robots only if you also agree to buy 200 dolls. This is an illegal practice called

Correct Answer
verified

The legal cartel theory indicates that in any industry where market demand and the long-run average total cost curve intersect close to the latter's minimum, government regulation is mandatory and desirable.

Correct Answer
verified

Per se violations in antitrust law refer to

Correct Answer
verified

Which of the following U.S. Supreme Court cases ruled that only monopolies that "unreasonably restrain trade" are violating antitrust laws?

Correct Answer
verified

Tying agreements

Correct Answer
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The main purpose of the antitrust laws is

Correct Answer
verified

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

Correct Answer
verified

Which of the following findings would be the most likely to lead the U.S. Justice Department to block a corporate merger under terms of the Clayton Act?

Correct Answer
verified

In which of the following cases was the firm found not guilty of violating the Sherman Act?

Correct Answer
verified

The argument that a large firm dominating an industry will not necessarily act like a monopolist, as expressed in the 1920 U.S. Steel case, suggests that the application of antitrust laws should be based on firm

Correct Answer
verified

A merger between one firm and another firm that is its supplier is known as a

Correct Answer
verified

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

Correct Answer
verified

The decision in the U.S. Steel case

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

In which of the following pairs of antitrust cases did the firms prevail against the antitrust charges leveled against them?

Correct Answer
verified

Exam 21: Antitrust Policy and Regulation

(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 criticism of social regulation is that it

Correct AnswerverifiedShow Answer

Where there is natural monopoly, government is most likely to implement

Correct AnswerverifiedShow Answer

Suppose that you own a toy store and want to buy 100 talking robots. Your supplier will sell you the robots only if you also agree to buy 200 dolls. This is an illegal practice called

Correct AnswerverifiedShow Answer

The legal cartel theory indicates that in any industry where market demand and the long-run average total cost curve intersect close to the latter's minimum, government regulation is mandatory and desirable.

Correct AnswerverifiedShow Answer

Per se violations in antitrust law refer to

Correct AnswerverifiedShow Answer

Which of the following U.S. Supreme Court cases ruled that only monopolies that "unreasonably restrain trade" are violating antitrust laws?

Correct AnswerverifiedShow Answer

Tying agreements

Correct AnswerverifiedShow Answer

The main purpose of the antitrust laws is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following findings would be the most likely to lead the U.S. Justice Department to block a corporate merger under terms of the Clayton Act?

Correct AnswerverifiedShow Answer

In which of the following cases was the firm found not guilty of violating the Sherman Act?

Correct AnswerverifiedShow Answer

The argument that a large firm dominating an industry will not necessarily act like a monopolist, as expressed in the 1920 U.S. Steel case, suggests that the application of antitrust laws should be based on firm

Correct AnswerverifiedShow Answer

A merger between one firm and another firm that is its supplier is known as a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The decision in the U.S. Steel case

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In which of the following pairs of antitrust cases did the firms prevail against the antitrust charges leveled against them?

Correct AnswerverifiedShow Answer

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