Question 1

When the government regulates prices to ensure that they are sufficient to cover costs, the government is using ____-_____ _______.

Accepted Answer

The answer of When the government regulates prices to ensure...

Question 2

The justification for industry regulation based on the argument that it is most efficient to have only one seller in a market makes sense when that seller:

Accepted Answer

A)   is the largest of all the competing sellers in its market.
B)   produces a good in which the public has a limited interest.
C)   faces decreasing long-run average total costs as its level of output becomes larger.
D)   uses small, inexpensive, non-specialized machinery and equipment to produce its product.

Question 3

Antitrust laws are designed to:

Accepted Answer

A)   increase government participation in business decision-making.
B)   promote competition through the production of goods and services by government enterprises.
C)   promote the operation of market forces by prohibiting certain practices that limit competition.
D)   all of the above.

Question 4

According to your textbook, an individual found guilty of violating the federal antitrust laws could go to prison for up to:

Accepted Answer

A)   90 days, and be fined $50,000 per offense.
B)   one year, and be fined $100,000 per offense.
C)   five years, and be fined $500,000 per offense.
D)   ten years, and be fined $1,000,000 per offense.

Question 5

Combinations and conspiracies in restraint of trade are:

Accepted Answer

A)   best illustrated by mergers.
B)   best illustrated by trade associations.
C)   any practices designed to reduce competition.
D)   practices carried out by two or more firms designed to reduce competition.

Question 6

Which of the following statements is true?

Accepted Answer

A)   Controlling a small share of the market exempts a firm from the antitrust laws.
B)   Controlling a very large share of the market is a per se violation of the antitrust laws.
C)   Trade associations are always in violation of the antitrust laws because their sole purpose is to monopolize markets.
D)   None of the above.

Question 7

A trade association can never hurt competition within a market.

Accepted Answer

A) True 
 B)False

Question 8

The idea that any business could be affected with a public interest is most closely associated with which of the following court decisions?

Accepted Answer

A)   Wickard v. Filburn.
B)   Nebbia v. New York.
C)   United States v. Philadelphia National Bank.
D)   United States v. the Environmental Protection Agency.

Question 9

To which of the following would the Rule of Reason apply?

Accepted Answer

A)   The setting of minimum prices by competing sellers in a market.
B)   An agreement by sellers in a market as to how buyers will be allocated among those sellers.
C)   The reporting of general supply and demand conditions to a trade association by competing sellers in a market.
D)   All of the above.

Question 10

When accusing a firm of a per se violation of the antitrust laws, the government must prove:

Accepted Answer

A)   that the violation occurred.
B)   the violation restrained trade.
C)   the firm intended to break the law.
D)   all of the above.

Question 11

Two firms enter into an agreement whereby one will market its product only west of the Mississippi River if the other will market its product only east of the Mississippi River. Such an agreement is:

Accepted Answer

A)   a violation of the Robinson-Patman Act.
B)   an agreement to divide sales territories.
C)   a Rule of Reason violation of the antitrust laws.
D)   all of the above.

Question 12

One firm can acquire another firm by:

Accepted Answer

A)   directly purchasing its assets.
B)   purchasing a controlling number of shares of its stock.
C)   both of the above.
D)   none of the above.

Question 13

The federal government agency that plays a major role in antitrust enforcement is the:

Accepted Answer

A)   Renegotiation Board.
B)   Federal Trade Commission.
C)   Council on Wage and Price Stability.
D)   Equal Employment Opportunity Commission.

Question 14

If a firm attempts to monopolize its market, the firm is likely guilty of a:

Accepted Answer

A)   Clayton Act violation.
B)   Celler-Kefauver Act violation.
C)   Sherman Act Section 1 violation.
D)   Sherman Act Section 2 violation.

Question 15

Which of the following statements about natural monopolies is true?

Accepted Answer

A)   Natural monopolies occur because of strong economies of scale in production and distribution.
B)   Over a large range of output, a natural monopolist's average, or unit, costs decrease as the level of output increases.
C)   A natural monopolist can produce at a lower average cost than could any of several smaller sellers if they were competing in the market.
D)   All of the above.

Question 16

When a buyer must purchase Good X in order to obtain Good Y, this is called:

Accepted Answer

A)   a tying contract.
B)   price discrimination.
C)   a sole supplier contract.
D)   an interlocking directorate.

Question 17

Which of the following is a possible violation of the Robinson-Patman Act?

Accepted Answer

A)   A seller's rival is injured because the seller charges a price below cost to the rival's buyers to draw them away from that rival.
B)   Some retail firms receive promotional material free of charge from a wholesaler but other equally qualified rivals must pay for that material.
C)   A firm goes bankrupt because a wholesaler sold an important input to its rivals at a lower price than it sold the input to the business that is now bankrupt.
D)   All of the above.

Question 18

Which of the following statements about government regulation is FALSE?

Accepted Answer

A)   Regulation is mainly concerned with competition in markets.
B)   Regulation can be divided into industry regulation and social regulation.
C)   Regulation involves government participation in business decision making.
D)   Regulation is carried out through various government agencies and commissions.

Question 19

The market share of the accused firm can be an important consideration in antitrust cases involving monopolization.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements about the justification for regulating businesses "affected with a public interest"is true?

Accepted Answer

A)   This justification for regulation applies to fewer situations than does the natural monopoly justification.
B)   This approach to regulation was declared unconstitutional when the Supreme Court ruled that the public can have no interest in a private business.
C)   Both of the above.
D)   None of the above.

Exam 14: Government and the Markets

Which of the following statements about the justification for regulating businesses "affected with a public interest"is true?

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Which of the following is a possible violation of the Robinson-Patman Act?

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When accusing a firm of a per se violation of the antitrust laws, the government must prove:

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When a buyer must purchase Good X in order to obtain Good Y, this is called:

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A trade association can never hurt competition within a market.

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Which of the following statements is true?

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The federal government agency that plays a major role in antitrust enforcement is the:

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When the government regulates prices to ensure that they are sufficient to cover costs, the government is using ____-_____ _______.

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To which of the following would the Rule of Reason apply?

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Antitrust laws are designed to:

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According to your textbook, an individual found guilty of violating the federal antitrust laws could go to prison for up to:

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One firm can acquire another firm by:

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Which of the following statements about natural monopolies is true?

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Which of the following statements about government regulation is FALSE?

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The market share of the accused firm can be an important consideration in antitrust cases involving monopolization.

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Combinations and conspiracies in restraint of trade are:

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If a firm attempts to monopolize its market, the firm is likely guilty of a:

Correct AnswerverifiedShow Answer

Two firms enter into an agreement whereby one will market its product only west of the Mississippi River if the other will market its product only east of the Mississippi River. Such an agreement is:

Correct AnswerverifiedShow Answer

The justification for industry regulation based on the argument that it is most efficient to have only one seller in a market makes sense when that seller:

Correct AnswerverifiedShow Answer

The idea that any business could be affected with a public interest is most closely associated with which of the following court decisions?

Correct AnswerverifiedShow Answer

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When the government regulates prices to ensure that they are sufficient to cover costs, the government is using __-_ _____.

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