Question 1

All of the following are regulatory commissions dealing with industrial regulation (as distinct from social regulation)  except the

Accepted Answer

A)   Food and Drug Administration.
B)   Federal Energy Regulatory Commission.
C)   Federal Communications Commission.
D)   50 state public utility commissions.E) C) and D)
F) B) and D)

Question 2

Which theory of regulation assumes that the industry wants to be regulated, in order to reduce competition and achieve cartel-like conditions?

Accepted Answer

A)   public interest theory
B)   legal cartel theory
C)   price-fixing theory
D)   public ownership theoryE) B) and C)
F) A) and C) B

Question 3

The argument that an industry that is highly concentrated will act like an anticompetitive monopolist would support the case that the application of antitrust laws should be based on industry

Accepted Answer

A)   mergers.
B)   structure.
C)   regulation.
D)   behavior.E) B) and C)
F) A) and D)

Question 4

Suppose a court rules that the ABC Corporation is in violation of the antitrust laws because it produces 70 percent of the output of its industry. This decision is consistent with the

Accepted Answer

A)   U.S. Steel case.
B)   Alcoa case.
C)   behavioralist approach to antitrust.
D)   legal cartel theory of regulation.E) C) and D)
F) A) and C)

Question 5

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) B) and C)
F) None of the above

Question 6

Public regulation rather than public ownership has been the primary means used in the United States to ensure that the behavior of natural monopolists is socially acceptable.

Accepted Answer

A) True 
 B)False  True

Question 7

Which of the following statements is true?

Accepted Answer

A)   "Behavioralists" believe that all monopolists are "bad" monopolists.
B)   "Structuralists" strongly abide by the "rule of reason" in applying antitrust laws.
C)   "Behavioralists" believe that some monopolists are "good" monopolists.
D)   "Structuralists" believe that some monopolists are "good" monopolists.E) None of the above
F) All of the above

Question 8

One good example of a government agency involved mainly in social regulation is the Food and Drug Administration.

Accepted Answer

A) True 
 B)False

Question 9

All price discrimination is deemed illegal in antitrust legislation.

Accepted Answer

A) True 
 B)False

Question 10

The government was successful in gaining an antitrust conviction in the

Accepted Answer

A)   U.S. Steel case.
B)   IBM case.
C)   Alcoa case.
D)   DuPont cellophane case.E) B) and C)
F) All of the above

Question 11

The Sherman Act was designed to

Accepted Answer

A)   exempt commercial banks from the antitrust laws.
B)   make interlocking directorates legal.
C)   prohibit misleading and antisocial advertising.
D)   make monopoly and acts that restrain trade illegal.E) B) and C)
F) A) and D)

Question 12

Which of the following cases established that the mere possession of monopoly power violated antitrust laws?

Accepted Answer

A)   IBM case of 1982
B)   Microsoft case of 1998
C)   Alcoa case of 1945
D)   AT&T case of 1982E) All of the above
F) A) and B)

Question 13

Dominant firms that formed in several industries in the U.S. in the 1870s and 1880s, which assigned control to a single decision group, were referred to as

Accepted Answer

A)   trusts.
B)   mergers.
C)   tying contracts.
D)   single-seller monopoly.E) B) and D)
F) None of the above

Question 14

The two alternative ways of promoting better outcomes when a natural monopoly exists are

Accepted Answer

A)   subsidy and taxation.
B)   public ownership and regulation.
C)   pricing and incorporation.
D)   breaking and merging.E) B) and C)
F) None of the above

Question 15

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 D)
F) A) and B)

Question 16

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) B) and D)
F) A) and B)

Question 17

Conspiracies to fix prices are

Accepted Answer

A)   illegal under the Clayton Act.
B)   illegal under the Celler-Kefauver Act.
C)   per se violations of the antitrust laws.
D)   more tolerated by government today than two or three decades ago.E) B) and C)
F) A) and D) C

Question 18

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 C)

Question 19

In the U.S. Steel case, the court ruled that

Accepted Answer

A)   even though a firm's behavior might be legal, the mere possession of monopoly power was in violation of the Sherman Act.
B)   only monopolies that unreasonably restrain trade are subject to antitrust action under the Sherman Act.
C)   when made by dominant firms, tying contracts are illegal, per se.
D)   the company violated the Clayton Act and therefore should be dissolved into several competing firms.E) A) and B)
F) C) and D)

Question 20

The Herfindahl index measures the

Accepted Answer

A)   size of the market share of the four largest firms in an industry.
B)   sum of the squared values of market shares of firms in an industry.
C)   increase in economic concentration resulting from a conglomerate merger.
D)   effect of per se violation in antitrust cases.E) A) and D)
F) A) and C)

Exam 21: Antitrust Policy and Regulation

All of the following are regulatory commissions dealing with industrial regulation (as distinct from social regulation) except the

Correct AnswerverifiedShow Answer

Which theory of regulation assumes that the industry wants to be regulated, in order to reduce competition and achieve cartel-like conditions?

Correct AnswerverifiedB

The argument that an industry that is highly concentrated will act like an anticompetitive monopolist would support the case that the application of antitrust laws should be based on industry

Correct AnswerverifiedShow Answer

Suppose a court rules that the ABC Corporation is in violation of the antitrust laws because it produces 70 percent of the output of its industry. This decision is consistent with the

Correct AnswerverifiedShow Answer

Defenders of social regulation point out that

Correct AnswerverifiedShow Answer

Public regulation rather than public ownership has been the primary means used in the United States to ensure that the behavior of natural monopolists is socially acceptable.

Correct AnswerverifiedTrue

Which of the following statements is true?

Correct AnswerverifiedShow Answer

One good example of a government agency involved mainly in social regulation is the Food and Drug Administration.

Correct AnswerverifiedShow Answer

All price discrimination is deemed illegal in antitrust legislation.

Correct AnswerverifiedShow Answer

The government was successful in gaining an antitrust conviction in the

Correct AnswerverifiedShow Answer

The Sherman Act was designed to

Correct AnswerverifiedShow Answer

Which of the following cases established that the mere possession of monopoly power violated antitrust laws?

Correct AnswerverifiedShow Answer

Dominant firms that formed in several industries in the U.S. in the 1870s and 1880s, which assigned control to a single decision group, were referred to as

Correct AnswerverifiedShow Answer

The two alternative ways of promoting better outcomes when a natural monopoly exists are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Sherman Act

Correct AnswerverifiedShow Answer

Conspiracies to fix prices are

Correct AnswerverifiedC

The main purpose of industrial regulation is to

Correct AnswerverifiedShow Answer

In the U.S. Steel case, the court ruled that

Correct AnswerverifiedShow Answer

The Herfindahl index measures the

Correct AnswerverifiedShow Answer

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B

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True

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C

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