Question 1

The Robinson-Patman Act of 1936

Accepted Answer

A)  made interlocking directorates illegal.
B)  set up the Federal Trade Commission (FT
C)   to deal with "unfair methods of competition."
C)  made monopolization of trade a misdemeanor.
D)  prohibited suppliers from offering special discounts to large chain stores without offering them to everyone else.
E)  empowered the FTC to deal with false and deceptive acts or practices.

Question 2

Exhibit 25-40
​
 1. B) Q2. C) Q3. D) Q4. E) Q5." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 25-4. The resource-allocative efficient level of output is

Accepted Answer

A)  Q1.
B)  Q2.
C)  Q3.
D)  Q4.
E)  Q5.

Question 3

Exhibit 25-40
​
 1 x Q1. B) P2 x Q3. C) P5 x Q1. D) P2 x Q2. E) P3 x Q3." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 25-4. What is the total revenue of the profit-maximizing natural monopoly?

Accepted Answer

A)  P1 x Q1.
B)  P2 x Q3.
C)  P5 x Q1.
D)  P2 x Q2.
E)  P3 x Q3.

Question 4

Which of the following statements is false?

Accepted Answer

A)  The way a market is defined can have much to say about whether a firm is viewed as a monopoly or not.
B)  In 1945, a court ruled that Alcoa was a monopoly.
C)  In the Dupont case in 1956, the market relevant to Dupont was ruled to be the cellophane market rather than the flexible wrapping materials market.
D)  The government eventually dropped its 1969 suit against IBM. C

Question 5

The hotel industry contains some aspects that economists consider to be part of the "hidden fee" economy.

Accepted Answer

A) True 
 B)False

Question 6

In the past, it was theorized that __________ firms were the most likely to innovate. In recent years, new information has suggested that __________ firms are greater innovators. If true, this makes antitrust intervention in the case of mergers __________ important.

Accepted Answer

A)  small; large; more
B)  small; large; less
C)  large; small; more
D)  large; small; less

Question 7

The monopoly power problem is that a monopoly

Accepted Answer

A)  produces a smaller output than that produced by a perfectly competitive firm.
B)  charges a higher price than the price a perfectly competitive firm would charge.
C)  creates a deadweight loss to society.
D)  a and b
E)  a, b, and c

Question 8

Switching costs make it less likely that the consumer of a network good will shift to a different company's product. This is called the __________ effect.

Accepted Answer

A)  lock-in
B)  system
C)  Internet
D)  compression

Question 9

Modern Justice Department guidelines evaluate mergers according to how they would change the industry's

Accepted Answer

A)  Herfindahl index.
B)  four-firm concentration ratio.
C)  eight-firm concentration ratio.
D)  twelve-firm concentration ratio. A

Question 10

The Sherman Act of 1890

Accepted Answer

A)  made conspiracy in the restraint of trade illegal.
B)  made price discrimination, exclusive dealing, tying contracts, and the acquisition of competing companies' stock illegal when they "substantially lessen competition or tend to create a monopoly."
C)  declared "unfair methods of competition in commerce" illegal.
D)  attempted to decrease the failure rate of small businesses by protecting them from the competition of large and growing chain stores.
E)  banned anticompetitive mergers that occurred as a result of one company acquiring the physical assets of another company.

Question 11

The Herfindahl index

Accepted Answer

A)  measures the degree of concentration in an industry.
B)  is the square of the sum of the market shares of each firm in the industry.
C)  is not subject to any of the criticisms of the concentration ratios.
D)  a and b
E)  all of the above

Question 12

If there are six firms in an industry and the market shares of the firms are 32 percent, 25 percent, 19 percent, 9 percent, 8 percent and 7 percent, the Herfindahl index is

Accepted Answer

A)  2,204.
B)  2,091.
C)  8,600.
D)  10,000.
E)  85.

Question 13

Which of the following is usually considered a natural monopoly?

Accepted Answer

A)  a major car manufacturer
B)  a car stereo installer
C)  overnight mail services
D)  state universities
E)  none of the above

Question 14

The type of merger most likely to reduce competition in an industry is a(n)  __________ merger.

Accepted Answer

A)  horizontal
B)  vertical
C)  conglomerate
D)  international

Question 15

Define the term lock-in effect and explain how this effect might make a network monopoly that benefits from it less likely to innovate.

Accepted Answer

The lock-in effect describes the situati...

Question 16

The Herfindahl index is obtained by

Accepted Answer

A)  adding the squares of the market shares of each firm in the industry.
B)  adding the market shares of the largest four firms in the industry.
C)  finding the difference between the squares of the market shares of each firm in the industry.
D)  finding the difference between the market shares of each firm in the industry.
E)  none of the above

Question 17

The merger of two firms producing personal computers is an example of a __________ merger.

Accepted Answer

A)  horizontal
B)  vertical
C)  conglomerate
D)  parallel

Question 18

If natural monopolies are regulated to produce where there is resource-allocative efficiency, they produce where

Accepted Answer

A)  price equals average total cost.
B)  marginal revenue equals marginal cost.
C)  price equals marginal cost.
D)  marginal revenue equals average total cost.

Question 19

The Federal Trade Commission Act of 1914

Accepted Answer

A)  made conspiracy in the restraint of trade illegal.
B)  made price discrimination, exclusive dealing, tying contracts, and the acquisition of competing companies' stock illegal when they "substantially lessen competition or tend to create a monopoly."
C)  declared "unfair methods of competition in commerce" illegal.
D)  attempted to decrease the failure rate of small businesses by protecting them from the competition of large and growing chain stores.
E)  banned anticompetitive mergers that occurred as a result of one company acquiring the physical assets of another company.

Question 20

What is the difference between a vertical merger and a horizontal merger? Which one is the Justice Department more likely to look at more carefully and why?

Accepted Answer

A vertical merger is a merger between two firms in the same industry, but at different stages of the production process so that the firms had the potential for a buyer-seller relationship prior to the merger. A horizontal merger is a merger between firms that are selling similar products in the same market and this is the type of merger that the Justice Department will investigate more closely because it is more likely to change the degree of concentration in an industry.

Exam 25: Government and Product Markets Antitrust and Regulation

The Robinson-Patman Act of 1936

Correct Answer
verified

Exhibit 25-40 -Refer to Exhibit 25-4. The resource-allocative efficient level of output is

Correct Answer
verified

Exhibit 25-40 -Refer to Exhibit 25-4. What is the total revenue of the profit-maximizing natural monopoly?

Correct Answer
verified

Which of the following statements is false?

Correct Answer
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C

The hotel industry contains some aspects that economists consider to be part of the "hidden fee" economy.

Correct Answer
verified

In the past, it was theorized that firms were the most likely to innovate. In recent years, new information has suggested that firms are greater innovators. If true, this makes antitrust intervention in the case of mergers __ important.

Correct Answer
verified

The monopoly power problem is that a monopoly

Correct Answer
verified

Switching costs make it less likely that the consumer of a network good will shift to a different company's product. This is called the __________ effect.

Correct Answer
verified

Modern Justice Department guidelines evaluate mergers according to how they would change the industry's

Correct Answer
verified
A

The Sherman Act of 1890

Correct Answer
verified

The Herfindahl index

Correct Answer
verified

If there are six firms in an industry and the market shares of the firms are 32 percent, 25 percent, 19 percent, 9 percent, 8 percent and 7 percent, the Herfindahl index is

Correct Answer
verified

Which of the following is usually considered a natural monopoly?

Correct Answer
verified

The type of merger most likely to reduce competition in an industry is a(n) __________ merger.

Correct Answer
verified

Define the term lock-in effect and explain how this effect might make a network monopoly that benefits from it less likely to innovate.

Correct Answer
verified
The lock-in effect describes the situati...
View Answer

The Herfindahl index is obtained by

Correct Answer
verified

The merger of two firms producing personal computers is an example of a __________ merger.

Correct Answer
verified

If natural monopolies are regulated to produce where there is resource-allocative efficiency, they produce where

Correct Answer
verified

The Federal Trade Commission Act of 1914

Correct Answer
verified

What is the difference between a vertical merger and a horizontal merger? Which one is the Justice Department more likely to look at more carefully and why?

Exam 25: Government and Product Markets Antitrust and Regulation

The Robinson-Patman Act of 1936

Correct AnswerverifiedShow Answer

Exhibit 25-40 ​ -Refer to Exhibit 25-4. The resource-allocative efficient level of output is

Correct AnswerverifiedShow Answer

Exhibit 25-40 ​ -Refer to Exhibit 25-4. What is the total revenue of the profit-maximizing natural monopoly?

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedC

The hotel industry contains some aspects that economists consider to be part of the "hidden fee" economy.

Correct AnswerverifiedShow Answer

In the past, it was theorized that __________ firms were the most likely to innovate. In recent years, new information has suggested that __________ firms are greater innovators. If true, this makes antitrust intervention in the case of mergers __________ important.

Correct AnswerverifiedShow Answer

The monopoly power problem is that a monopoly

Correct AnswerverifiedShow Answer

Switching costs make it less likely that the consumer of a network good will shift to a different company's product. This is called the __________ effect.

Correct AnswerverifiedShow Answer

Modern Justice Department guidelines evaluate mergers according to how they would change the industry's

Correct AnswerverifiedA

The Sherman Act of 1890

Correct AnswerverifiedShow Answer

The Herfindahl index

Correct AnswerverifiedShow Answer

If there are six firms in an industry and the market shares of the firms are 32 percent, 25 percent, 19 percent, 9 percent, 8 percent and 7 percent, the Herfindahl index is

Correct AnswerverifiedShow Answer

Which of the following is usually considered a natural monopoly?

Correct AnswerverifiedShow Answer

The type of merger most likely to reduce competition in an industry is a(n) __________ merger.

Correct AnswerverifiedShow Answer

Define the term lock-in effect and explain how this effect might make a network monopoly that benefits from it less likely to innovate.

Correct AnswerverifiedThe lock-in effect describes the situati...View AnswerShow Answer

The Herfindahl index is obtained by

Correct AnswerverifiedShow Answer

The merger of two firms producing personal computers is an example of a __________ merger.

Correct AnswerverifiedShow Answer

If natural monopolies are regulated to produce where there is resource-allocative efficiency, they produce where

Correct AnswerverifiedShow Answer

The Federal Trade Commission Act of 1914

Correct AnswerverifiedShow Answer

What is the difference between a vertical merger and a horizontal merger? Which one is the Justice Department more likely to look at more carefully and why?

Correct Answer
verified

Exhibit 25-40 -Refer to Exhibit 25-4. The resource-allocative efficient level of output is

Correct Answer
verified

Exhibit 25-40 -Refer to Exhibit 25-4. What is the total revenue of the profit-maximizing natural monopoly?

Correct Answer
verified

Correct Answer
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C

Correct Answer
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In the past, it was theorized that firms were the most likely to innovate. In recent years, new information has suggested that firms are greater innovators. If true, this makes antitrust intervention in the case of mergers __ important.

Correct Answer
verified

Correct Answer
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A

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Correct Answer
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The lock-in effect describes the situati...
View Answer

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