Question 1

Suppose the firms in a six-firm industry have market shares of 32, 20, 16, 16, 10, and 6 percent, respectively. The Herfindahl index for the industry is

Accepted Answer

A)  1,936.
B)  2,072.
C)  84.
D)  2,020.E) None of the above
F) C) and D)

Question 2

Antitrust authorities are least likely to take action against

Accepted Answer

A)  conglomerate mergers.
B)  horizontal mergers.
C)  interlocking directorates.
D)  price-fixing.E) C) and D)
F) B) and D)

Question 3

If a buyer who wants product A is required by the seller to buy its products B and C as well, this is called

Accepted Answer

A)  an exclusive contract.
B)  profit maximization.
C)  competitive pricing.
D)  a tying contract.E) A) and C)
F) B) and C)

Question 4

Which of the following is characteristic of a regulated natural monopoly?

Accepted Answer

A)  extensive economies of scale
B)  the wasteful duplication of capital facilities in the event of competition
C)  the provision of an essential service
D)  all of theseE) B) and C)
F) A) and D)

Question 5

Most economists conclude that deregulation has reduced prices and led to more competition in deregulated industries.

Accepted Answer

A) True 
 B)False

Question 6

Which act specifically outlawed price discrimination when such discrimination is not justified based on cost differences and when it reduces competition?

Accepted Answer

A)  Sherman Act
B)  Clayton Act
C)  Wheeler-Lea Act
D)  Federal Trade Commission ActE) A) and D)
F) A) and C)

Question 7

Defenders of social regulation point out that

Accepted Answer

A)  social regulation is a better alternative than unregulated natural monopoly.
B)  critics who stress the high administrative and compliance costs of social regulation underestimate the social benefits that the regulations produce.
C)  the number of regulatory agencies has declined over the past two decades.
D)  social regulations reduce product prices.E) A) and D)
F) All of the above

Question 8

What are tying contracts? How are tying contracts treated by antitrust enforcers?

Accepted Answer

A tying contract is a requirement impose...

Question 9

A caption that could serve as a warning to proponents of social regulation is

Accepted Answer

A)  "There is no free lunch."
B)  "The rule of reason will prevail."
C)  "The public interest will prevail."
D)  "Protect the greatest number."E) B) and D)
F) All of the above

Question 10

In 2018, tuna companies StarKist and Bumble Bee were charged with which antitrust violation?

Accepted Answer

A)  monopoly structure
B)  price-fixing
C)  tying contracts
D)  dividing up the marketE) A) and B)
F) All of the above

Question 11

Legislation designed to regulate natural monopolies would be based on which theory of regulation?

Accepted Answer

A)  social
B)  legal cartel
C)  public interest
D)  price-fixingE) A) and C)
F) A) and D)

Question 12

What have been the major outcomes from deregulation of industry? Give three examples of changes in particular industries.

Accepted Answer

The overwhelming consensus among economi...

Question 13

The Celler-Kefauver Act of 1950

Accepted Answer

A)  outlawed price-fixing.
B)  amended the Sherman Act.
C)  amended the Clayton Act.
D)  created the Civil Aeronautics Board (CA
B)  .E) B) and C)
F) A) and D)

Question 14

Interlocking directorates refers to a situation where

Accepted Answer

A)  a director of one firm is also a board member of a competing firm.
B)  members of the board of directors of a firm could not agree on a clear strategy for the firm.
C)  competing firms have separate and different members in their boards.
D)  a company's board splits into two rival camps locked in constant struggle.E) A) and D)
F) B) and C)

Question 15

A vertical merger involves a combining of one or more firms

Accepted Answer

A)  as the result of one firm purchasing the assets of the other.
B)  that are operating in entirely different industries.
C)  operating at different stages of the production process in a particular industry.
D)  operating at the same stage of the production process.E) None of the above
F) A) and B)

Question 16

The rule of reason in antitrust applications means that if a firm has a dominant share of the market, it stands to reason that it will exploit its monopoly power to gain an unfair advantage over its rivals.

Accepted Answer

A) True 
 B)False

Question 17

A major difference between industrial regulation and social regulation is that industrial regulation

Accepted Answer

A)  covers many industries across the economy.
B)  has expanded rapidly since the 1970s.
C)  is targeted at the prices charged, the costs of production, and amount of profit.
D)  focuses on product design, employment conditions, and the production process.E) B) and C)
F) A) and D)

Question 18

Which type of merger is most likely to be the focus of antitrust scrutiny and enforcement?

Accepted Answer

A)  conglomerate
B)  horizontal
C)  vertical
D)  naturalE) A) and B)
F) All of the above

Question 19

Critics of social regulation argue that it

Accepted Answer

A)  causes deflation.
B)  violates the due process clause of the U.S. Constitution.
C)  is a relatively greater burden for small firms than for large firms.
D)  improves allocative efficiency.E) All of the above
F) B) and C)

Question 20

According to the Consider This box "Of Sea Fish and eBooks (and Other Things in Common) ", firms from which country, in 2018, were fined for colluding to fix the price of construction rebar in the United States?

Accepted Answer

A)  Korea
B)  France
C)  Japan
D)  GermanyE) B) and C)
F) A) and D)

Exam 21: Antitrust Policy and Regulation

Interlocking directorates refers to a situation where

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The rule of reason in antitrust applications means that if a firm has a dominant share of the market, it stands to reason that it will exploit its monopoly power to gain an unfair advantage over its rivals.

Correct AnswerverifiedShow Answer

Which type of merger is most likely to be the focus of antitrust scrutiny and enforcement?

Correct AnswerverifiedShow Answer

In 2018, tuna companies StarKist and Bumble Bee were charged with which antitrust violation?

Correct AnswerverifiedShow Answer

A caption that could serve as a warning to proponents of social regulation is

Correct AnswerverifiedShow Answer

According to the Consider This box "Of Sea Fish and eBooks (and Other Things in Common) ", firms from which country, in 2018, were fined for colluding to fix the price of construction rebar in the United States?

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A vertical merger involves a combining of one or more firms

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What have been the major outcomes from deregulation of industry? Give three examples of changes in particular industries.

Correct AnswerverifiedThe overwhelming consensus among economi...View AnswerShow Answer

Antitrust authorities are least likely to take action against

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Which act specifically outlawed price discrimination when such discrimination is not justified based on cost differences and when it reduces competition?

Correct AnswerverifiedShow Answer

If a buyer who wants product A is required by the seller to buy its products B and C as well, this is called

Correct AnswerverifiedShow Answer

What are tying contracts? How are tying contracts treated by antitrust enforcers?

Correct AnswerverifiedA tying contract is a requirement impose...View AnswerShow Answer

The Celler-Kefauver Act of 1950

Correct AnswerverifiedShow Answer

Suppose the firms in a six-firm industry have market shares of 32, 20, 16, 16, 10, and 6 percent, respectively. The Herfindahl index for the industry is

Correct AnswerverifiedShow Answer

Legislation designed to regulate natural monopolies would be based on which theory of regulation?

Correct AnswerverifiedShow Answer

Most economists conclude that deregulation has reduced prices and led to more competition in deregulated industries.

Correct AnswerverifiedShow Answer

A major difference between industrial regulation and social regulation is that industrial regulation

Correct AnswerverifiedShow Answer

Critics of social regulation argue that it

Correct AnswerverifiedShow Answer

Defenders of social regulation point out that

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Which of the following is characteristic of a regulated natural monopoly?

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The overwhelming consensus among economi...
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A tying contract is a requirement impose...
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