Question 1

Differences in the application of antitrust laws are in part rooted on the issue of how broadly antitrust authorities should define the relevant

Accepted Answer

A)  market.
B)  product.
C)  price.
D)  firm.E) A) and B)
F) C) and D)

Question 2

If there was a conspiracy to fix prices, but the conspiracy did not succeed, the government can still take the conspiring firm to court for improper conduct. This situation would be an example of

Accepted Answer

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

Question 3

The Sherman Act

Accepted Answer

A)  was declared unconstitutional in 1895.
B)  provided for government regulation of the railroads.
C)  declared monopoly and restraints of trade to be illegal.
D)  exempted the railroad and communications industries from the antitrust laws.E) C) and D)
F) A) and D)

Question 4

Describe the importance and major features of the Sherman Act of 1890.

Accepted Answer

The public resentment of trusts that eme...

Question 5

Tying contracts are illegal under the

Accepted Answer

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

Question 6

The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. The government would be most likely to challenge a merger between

Accepted Answer

A)  Firm 1 in Alpha and Firm 6 in Delta.
B)  Firms 3 and 4 in Beta.
C)  Firms 1 and 2 in Kappa.
D)  Firm 4 in Alpha and Firm 3 in Kappa.E) B) and C)
F) A) and B)

Question 7

The main purpose of industrial regulation is to

Accepted Answer

A)  lower price to marginal cost.
B)  lower price to average total cost such that the firm earns a fair return.
C)  break monopolies into competing firms.
D)  reduce X-inefficiency.E) B) and D)
F) A) and B)

Question 8

The legislation that prohibited "every contract . . . or conspiracy, in restraint of trade and commerce" is the

Accepted Answer

A)  Federal Trade Commission Act.
B)  Clayton Act.
C)  Celler-Kefauver Act.
D)  Sherman Act.E) C) and D)
F) B) and D)

Question 9

Which of the following is least likely to violate the Sherman Act or the Clayton Act?

Accepted Answer

A)  Competitive firms A, B, and C meet and agree to charge a common price.
B)  Competitive firms D and E, each with 35 percent market shares, merge into a single firm.
C)  Competitive firms F and G independently charge lower prices to frequent customers than to occasional customers.
D)  Large dominant firm H forces buyers to purchase its product X in order to buy its popular product Y.E) B) and C)
F) A) and D)

Question 10

Interlocking directorates are

Accepted Answer

A)  legal if the two firms have small market shares.
B)  illegal under provisions of the Federal Trade Commission Act of 1914.
C)  illegal under provisions of the Celler-Kefauver Act of 1950.
D)  illegal under provisions of the Clayton Act of 1914.E) All of the above
F) A) and B)

Question 11

The view that the mere possession of monopoly power is a violation of the antitrust laws, as in the Alcoa case of 1945, suggests that the application of antitrust laws should be based on industry

Accepted Answer

A)  behavior.
B)  size.
C)  efficiency.
D)  structure.E) B) and C)
F) All of the above

Question 12

The argument that a large firm dominating an industry will not necessarily act like a monopolist, as expressed in the 1920 U.S. Steel case, suggests that the application of antitrust laws should be based on firm

Accepted Answer

A)  behavior.
B)  structure.
C)  efficiency.
D)  concentration ratios.E) A) and C)
F) All of the above

Question 13

Which is the most valid criticism of the regulation of natural monopolies and other firms subject to regulation by regulatory commissions?

Accepted Answer

A)  It is difficult to find enough honest people to serve on regulatory commissions.
B)  Such regulation is unnecessary and amounts to creeping socialism.
C)  Many members of such commissions are appointed rather than being elected.
D)  Regulated firms may have little incentive to contain costs since they are assured a "fair" return above costs.E) A) and D)
F) B) and C)

Question 14

According to the legal cartel theory of regulation, firms desire to have government regulation because it protects them from competition.

Accepted Answer

A) True 
 B)False

Question 15

Briefly describe the historical background that gave rise to antitrust laws and regulation in the United States.

Accepted Answer

Just after the U.S. Civil War (1861-1865...

Question 16

Which one of the following is most likely to increase the Herfindahl index of a particular industry?

Accepted Answer

A)  a conglomerate merger
B)  a vertical merger
C)  a price-fixing arrangement among all the industry firms
D)  a horizontal mergerE) All of the above
F) B) and C)

Question 17

Differences in the interpretation and the enforcement of antitrust laws are in part rooted on the issue of focus. One such issue pertains to the question of whether the policy focus should be on

Accepted Answer

A)  domestic firms versus multinationals.
B)  intrastate trade versus interstate trade.
C)  monopoly output versus monopoly pricing
D)  monopoly behavior versus monopoly structure.E) A) and B)
F) A) and C)

Question 18

Industrial regulation generally applies in cases where

Accepted Answer

A)  society would benefit if a monopoly is prevented from evolving in a certain market.
B)  a monopoly already exists, and the government believes that society would benefit if it is dissolved.
C)  there is an economic reason for an industry to be organized as a monopoly.
D)  foreign competition in the form of imports is prevalent in the market.E) A) and B)
F) A) and D)

Question 19

What is industrial regulation? As a federal regulatory commission, what is the jurisdiction of the Federal Communications Commission (FCC)?

Accepted Answer

Industrial regulation, or public regulat...

Question 20

The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. Those who focus on monopoly structure would most likely assert that there is a violation of antitrust law in which industry?

Accepted Answer

A)  Alpha
B)  Beta
C)  Kappa
D)  DeltaE) All of the above
F) B) and D)

Exam 21: Antitrust Policy and Regulation

The argument that a large firm dominating an industry will not necessarily act like a monopolist, as expressed in the 1920 U.S. Steel case, suggests that the application of antitrust laws should be based on firm

Correct AnswerverifiedShow Answer

Differences in the application of antitrust laws are in part rooted on the issue of how broadly antitrust authorities should define the relevant

Correct AnswerverifiedShow Answer

The legislation that prohibited "every contract . . . or conspiracy, in restraint of trade and commerce" is the

Correct AnswerverifiedShow Answer

The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. Those who focus on monopoly structure would most likely assert that there is a violation of antitrust law in which industry?

Correct AnswerverifiedShow Answer

If there was a conspiracy to fix prices, but the conspiracy did not succeed, the government can still take the conspiring firm to court for improper conduct. This situation would be an example of

Correct AnswerverifiedShow Answer

Interlocking directorates are

Correct AnswerverifiedShow Answer

Describe the importance and major features of the Sherman Act of 1890.

Correct AnswerverifiedThe public resentment of trusts that eme...View AnswerShow Answer

The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. The government would be most likely to challenge a merger between

Correct AnswerverifiedShow Answer

The main purpose of industrial regulation is to

Correct AnswerverifiedShow Answer

Which one of the following is most likely to increase the Herfindahl index of a particular industry?

Correct AnswerverifiedShow Answer

What is industrial regulation? As a federal regulatory commission, what is the jurisdiction of the Federal Communications Commission (FCC)?

Correct AnswerverifiedIndustrial regulation, or public regulat...View AnswerShow Answer

Briefly describe the historical background that gave rise to antitrust laws and regulation in the United States.

Correct AnswerverifiedJust after the U.S. Civil War (1861-1865...View AnswerShow Answer

Tying contracts are illegal under the

Correct AnswerverifiedShow Answer

Which is the most valid criticism of the regulation of natural monopolies and other firms subject to regulation by regulatory commissions?

Correct AnswerverifiedShow Answer

Which of the following is least likely to violate the Sherman Act or the Clayton Act?

Correct AnswerverifiedShow Answer

According to the legal cartel theory of regulation, firms desire to have government regulation because it protects them from competition.

Correct AnswerverifiedShow Answer

The Sherman Act

Correct AnswerverifiedShow Answer

Differences in the interpretation and the enforcement of antitrust laws are in part rooted on the issue of focus. One such issue pertains to the question of whether the policy focus should be on

Correct AnswerverifiedShow Answer

Industrial regulation generally applies in cases where

Correct AnswerverifiedShow Answer

The view that the mere possession of monopoly power is a violation of the antitrust laws, as in the Alcoa case of 1945, suggests that the application of antitrust laws should be based on industry

Correct AnswerverifiedShow Answer

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The public resentment of trusts that eme...
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Industrial regulation, or public regulat...
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Just after the U.S. Civil War (1861-1865...
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