Exam 21: Antitrust Policy and Regulation

A) promoting competition and efficiency.
B) remedying existing anticompetitive behavior.
C) deterring price-fixing and anticompetitive mergers.
D) breaking up monopolies.

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A) the mere possession of monopoly power is a violation of the antitrust laws.
B) only contracts and combinations that unreasonably restrain trade are in violation of the Sherman Act.
C) retail and wholesale firms are exempt from antitrust legislation.
D) firms that sell more than one-half of their output overseas are exempt from antitrust.

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A) view competition as a long-run dynamic process in which firms battle for dominance of markets but rarely can sustain such dominance once it is achieved.
B) believe the antitrust laws are as important today as they were when they were passed in the early 1900s.
C) say that an industry's structure, which is based on economies of scale, usually predicts the behavior of the industry firms.
D) contend that large, dominant firms should be broken into smaller competitive firms and then government should stand back and let competition prevail.

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A) many small firms.
B) firms producing the same product.
C) firms producing unrelated products.
D) firms operating at different stages in a given production process.

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A) the rule of reason.
B) a cease-and-desist order.
C) a per se violation.
D) tying contracts.

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A) it has been applied to virtually all major U.S. corporations in the post-Second World War period.
B) marginal cost pricing has created an underallocation of resources.
C) by allowing a fair return price, it gives natural monopolists little incentive to contain costs.
D) regulatory commissions have frequently caused natural monopolies to go bankrupt.

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A) Even if the algorithms produce collusive prices, the lack of an agreement makes it difficult to prosecute under current antitrust law.
B) The encrypted data does not allow regulators to determine whether prices are converging to a level consistent with collusion.
C) Online pricing algorithms are programmed to randomly vary prices to prevent antitrust regulators from discovering price-fixing.
D) Online pricing algorithms are programmed to ensure that there is just enough of a gap between prices across firms that collusion would be impossible to prove.

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A) it was too specific.
B) it was never enforced by the courts.
C) violators of the act were forced out of business.
D) it did not explicitly state which activities were illegal.

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A) change in the business practices of Microsoft.
B) merging of Microsoft with another company.
C) breakup of Microsoft into smaller firms.
D) takeover of Microsoft by the government.

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A) the mere presence of monopoly violated the Sherman Act, irrespective of Microsoft's behavior.
B) Microsoft was a "bad monopoly."
C) Microsoft was generally a "good monopoly" but that its tying contracts involving Internet Explorer violated the Clayton Act.
D) the case was similar to the U.S. Steel case of 1920.

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A) Wheeler-Lea Act
B) Clayton Act
C) Sherman Act
D) Celler-Kefauver Act

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A) the rule of reason is appropriate and desirable in interpreting the Sherman Act.
B) only unreasonable anticompetitive acts should be regarded as violations of the antitrust laws.
C) industries should be judged on the basis of their technological progress and their price-output behavior.
D) an industry that is highly concentrated will behave monopolistically.

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A) the government fixing the prices of products of antitrust violators.
B) a company fixing the price of its own product regardless of the degree of competition.
C) competitors colluding to set their prices collectively.
D) a company paying its suppliers a fixed price for certain inputs.

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A) the Wheeler-Lea Act
B) the Federal Trade Commission Act
C) the Sherman Act
D) the Interstate Commerce Act

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A) Wagner Act of 1935.
B) Clayton Act of 1914.
C) FTC Act of 1914.
D) Celler-Kefauver Act of 1950.

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A) The monopolist will maximize profits by setting a price that's higher than marginal cost.
B) The price will be higher than what would prevail in a competitive market.
C) In monopoly pricing, income is, in effect, transferred from consumers to the monopolist.
D) The output level will be higher than in a competitive market.

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A) Federal Trade Commission Act.
B) Clayton Act.
C) Celler-Kefauver Act.
D) Wheeler-Lea Act.

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