Question 1

Which of the following would be a laissez-faire approach for the government to follow?

Accepted Answer

A)   take control of the nation's airline system
B)   regulate the allowable emissions of pollutants from electric plants
C)   remove all regulations on the channels a cable television system must carry
D)   become more stringent in the type of mergers that receive government approval
E)   protect dairy-farm owners with a guaranteed minimum price for milk C

Question 2

When the court requires evidence that a monopoly actually used its size to violate antitrust laws, this criterion is called

Accepted Answer

A)   rule of reason
B)   Sherman antitrust
C)   per se
D)   countervailing power
E)   creative destruction

Question 3

A fair price for a regulated monopoly is for the regulatory commission to set price equal to

Accepted Answer

A)   marginal cost
B)   marginal revenue
C)   economic profit
D)   average total cost
E)   normal profit

Question 4

Monopoly firms in contestable markets view the major threat to an exploitation of monopoly power to be

Accepted Answer

A)   government regulation
B)   antitrust policy
C)   nationalization
D)   laissez-faire
E)   the competition from new entrants

Question 5

If the government owns a nationalized firm, the prices are

Accepted Answer

A)   set by an administrative agency of the government
B)   set by the free market
C)   high enough to make economic profits for the government
D)   determined by competition
E)   set to encourage efficiency and reduce waste

Question 6

Creative destruction theory is essentially an argument that profit potential within a noncompetitive industry creates an incentive for new types of competing industry, thereby strengthening the original industry's market power.

Accepted Answer

A) True 
 B)False

Question 7

The text refers to the Green Bay Packers as an example of a nonprofit corporation that is no less efficient than a profit-maximizing NFL team.

Accepted Answer

A) True 
 B)False

Question 8

The term laissez-faire has the same meaning as which Beatles song?

Accepted Answer

A)   Hey Jude
B)   Penny Lane
C)   Nowhere Man
D)   Tax Man
E)   Let it Be

Question 9

A simple solution to the problem of monopolies is for the government to regulate price.

Accepted Answer

A) True 
 B)False

Question 10

Some economists see monopolies as inevitable, but not necessarily bad. They recommend a policy of

Accepted Answer

A)   regulating prices
B)   nationalization
C)   laissez-faire
D)   encouraging concentration
E)   splitting up the monopoly

Question 11

Enforcement of antitrust laws is the responsibility of

Accepted Answer

A)   only the Department of Justice
B)   only the Federal Trade Commission
C)   only the Antitrust Division
D)   both the Justice Department and the Federal Trade Commission
E)   the President D

Question 12

If the courts apply the per se criterion to a firm that dominates a market but does not engage in anticompetitive behavior, it would not find the firm to be in violation of the antitrust laws.

Accepted Answer

A) True 
 B)False  False

Question 13

The main problem with a regulatory commission setting P = ATC is that the regulated firm will

Accepted Answer

A)   experience a loss
B)   find its demand curve shifting to the left
C)   earn economic profits
D)   refuse to make new purchases of capital
E)   have little incentive to keep costs down

Question 14

A law that encourages market competition by prohibiting firms from gaining or exercising excessive market power is

Accepted Answer

A)   a patent
B)   in conflict with the Constitution
C)   supported by laissez-faire advocates
D)   impossible to enforce
E)   an antitrust law

Question 15

Historically, one problem found in most regulatory commissions is

Accepted Answer

A)   the government cannot find qualified commissioners
B)   the U.S. Constitution requires laissez-faire
C)   the company will headquarter itself in a foreign country
D)   the regulators become the protectors of the industry
E)   price is set too low and most regulated firms go bankrupt

Question 16

Antitrust issues can be political firestorms. In order to accomplish their economic missions regarding monopolies, regulation, and antitrust policy without incurring the scrutiny of the press and public, many presidents choose to

Accepted Answer

A)   ignore the issue
B)   adopt the rule of reason
C)   adopt the per se rule
D)   manipulate the budgets of enforcement agencies
E)   promote policies outlined in the Clayton Act

Question 17

Antitrust enforcement is primarily limited by the

Accepted Answer

A)   cooperation of offending firms
B)   small number of cases
C)   unwillingness of damaged competitors to press charges
D)   limited amount of funding allocated by the government
E)   failure of judges to punish antitrust violators

Question 18

a.What is the theory of creative destruction?
b. According to this theory, do we need to worry about the fact that our local power utility has a monopoly in the provision of electricity?

Accepted Answer

a. This is the idea that, although it ma...

Question 19

If monopolies are both inevitable and bad, which policy alternative will be least disruptive of all effective policy alternatives?

Accepted Answer

A)   regulate prices
B)   nationalize
C)   laissez-faire
D)   encourage concentration
E)   split up the monopoly

Question 20

If left alone, a natural monopoly will

Accepted Answer

A)   earn normal profits
B)   earn maximum economic profits
C)   produce where P = ATC
D)   face competition from new entrants
E)   go out of business

Exam 13: Antitrust and Regulation

Which of the following would be a laissez-faire approach for the government to follow?

Correct AnswerverifiedC

When the court requires evidence that a monopoly actually used its size to violate antitrust laws, this criterion is called

Correct AnswerverifiedShow Answer

A fair price for a regulated monopoly is for the regulatory commission to set price equal to

Correct AnswerverifiedShow Answer

Monopoly firms in contestable markets view the major threat to an exploitation of monopoly power to be

Correct AnswerverifiedShow Answer

If the government owns a nationalized firm, the prices are

Correct AnswerverifiedShow Answer

Creative destruction theory is essentially an argument that profit potential within a noncompetitive industry creates an incentive for new types of competing industry, thereby strengthening the original industry's market power.

Correct AnswerverifiedShow Answer

The text refers to the Green Bay Packers as an example of a nonprofit corporation that is no less efficient than a profit-maximizing NFL team.

Correct AnswerverifiedShow Answer

The term laissez-faire has the same meaning as which Beatles song?

Correct AnswerverifiedShow Answer

A simple solution to the problem of monopolies is for the government to regulate price.

Correct AnswerverifiedShow Answer

Some economists see monopolies as inevitable, but not necessarily bad. They recommend a policy of

Correct AnswerverifiedShow Answer

Enforcement of antitrust laws is the responsibility of

Correct AnswerverifiedD

If the courts apply the per se criterion to a firm that dominates a market but does not engage in anticompetitive behavior, it would not find the firm to be in violation of the antitrust laws.

Correct AnswerverifiedFalse

The main problem with a regulatory commission setting P = ATC is that the regulated firm will

Correct AnswerverifiedShow Answer

A law that encourages market competition by prohibiting firms from gaining or exercising excessive market power is

Correct AnswerverifiedShow Answer

Historically, one problem found in most regulatory commissions is

Correct AnswerverifiedShow Answer

Antitrust issues can be political firestorms. In order to accomplish their economic missions regarding monopolies, regulation, and antitrust policy without incurring the scrutiny of the press and public, many presidents choose to

Correct AnswerverifiedShow Answer

Antitrust enforcement is primarily limited by the

Correct AnswerverifiedShow Answer

a.What is the theory of creative destruction? b. According to this theory, do we need to worry about the fact that our local power utility has a monopoly in the provision of electricity?

Correct Answerverifieda. This is the idea that, although it ma...View AnswerShow Answer

If monopolies are both inevitable and bad, which policy alternative will be least disruptive of all effective policy alternatives?

Correct AnswerverifiedShow Answer

If left alone, a natural monopoly will

Correct AnswerverifiedShow Answer

Correct Answer
verified
C

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
D

Correct Answer
verified
False

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. This is the idea that, although it ma...
View Answer

Correct Answer
verified

Correct Answer
verified