Question 1

Briefly compare and contrast cost-plus regulation and price cap regulation.

Accepted Answer

Cost-plus regulation refers to governmen...

Question 2

The term _______ refers to the percentage share of a firm's total sales in the market.

Accepted Answer

A)   market share
B)   concentration ratio
C)   total market ratio
D)   market cap

Question 3

Currently, the approach to antitrust regulation involves

Accepted Answer

A)   defining a market and counting up total sales.
B)   market concentration ratio.
C)   HHI and concentration ratio.
D)   detailed analysis of specific markets and companies.

Question 4

What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair?

Accepted Answer

A)   Department of Justice
B)   Antitrust Act
C)   Federal Trade Commission
D)   Supreme Court

Question 5

Briefly explain regulation in the case of a natural monopoly. Provide 3 common examples of regulation. Briefly discuss the benefits of privatization set out in the text and explain what is required for privatization of a nationalized asset in order for privatization to work well.

Accepted Answer

In case of a natural monopoly, market c...

Question 6

What is the maximum value that can be reached using the HHI?

Accepted Answer

A)   100
B)   1,000
C)   10,000
D)   100,000

Question 7

When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing

Accepted Answer

A)   deregulation.
B)   price cap regulation.
C)   cost-plus regulation
D)   regulatory capture rules.

Question 8

City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below.

If the government decides to regulate this natural monopoly by forcing them to produce at the point where the demand curve intersects marginal cost, then the firm will make a _______ and _______ continue in the long run.

Accepted Answer

A)   loss of $24 million, will not
B)   loss of $33 million, will not
C)   profit of $33 million, will
D)   profit of $24 million, will

Question 9

Following the commencement of deregulation of US airline industry in the 1970s, reduced airfares saved consumers billions of dollar a year however, the more recent string of airline mergers has

Accepted Answer

A)   government safety regulators increasing employment opportunities for safety inspectors every year.
B)   doubled the number of high-paying jobs in the airline industry year after year.
C)   raised new concerns over how competition in the industry can once again be strengthened.
D)   encouraged deregulators to push further and consider industries where deregulation needs are not obvious.

Question 10

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers?

Accepted Answer

A)   merged firms generally are as efficient and innovative as they can be
B)   consumers will have greater access to lower priced goods and services
C)   merged firms can increase price and maintain permanently higher profits
D)   merged firms are better positioned to take advantage of economies of scale

Question 11

A business _______ occurs when, for practical purposes, one firm purchases another.

Accepted Answer

A)   merger
B)   loss
C)   acquisition
D)   antitrust violation

Question 12

There have been two especially important shifts in how markets are defined in recent decades: one involves _______ and the other involves _______.

Accepted Answer

A)   technology; globalization
B)   the Internet; technology
C)   communication technologies; the Internet
D)   globalization; communication technologies

Question 13

Firms operating under cost-plus regulation have an incentive to generate high costs by building huge factories or employing lots of staff,

Accepted Answer

A)   because doing so creates efficiencies and innovation.
B)   because the market changes dramatically and they have incentive to meet new demand.
C)   because this will reduce the firm's costs more quickly and it can make a high level of profit.
D)   because what they can charge is linked to the costs they incur.

Question 14

Antitrust laws were created to give government the power to

Accepted Answer

A)   block certain mergers and break up large firms into smaller ones.
B)   block cartels, and break up regulatory capture.
C)   force the firm to sell off the profitable parts of its operation.
D)   block certain mergers that are determined to be uncompetitive.

Question 15

Why would regulators find that a proposed merger is likely to lessen competition?

Accepted Answer

A)   it can lead to lower prices
B)   it can increase availability of goods
C)   it can enhance innovation
D)   it can lead to lower quality products

Question 16

The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will

Accepted Answer

A)   contravene antitrust regulations.
B)   lead to attracting more customers.
C)   let them produce more efficiently.
D)   the right answer is both b and c.

Question 17

In the 1980s, the FTC followed guidelines stipulating that, should a proposed merger result in an HHI of less than 1,000,

Accepted Answer

A)   the FTC would probably challenge it.
B)   the FTC would scrutinize the proposal.
C)   the FTC would probably approve it.
D)   the FTC make a case-by-case decision.

Question 18

Which of the following is a true statement?

Accepted Answer

A)   The government approves most proposed mergers.
B)   Government regulators agree that few mergers are beneficial to consumers.
C)   Government regulators agree that all mergers are beneficial to consumers.
D)   The government disapproves most proposed mergers.

Question 19

The four-firm _______ measures the percentage share of the total sales in the Industry that is accounted for by the largest four firms.

Accepted Answer

A)   coordination ratio
B)   market share ratio
C)   concentration ratio
D)   production ratio

Question 20

The term _______ refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow.

Accepted Answer

A)   regulatory tie-in
B)   deregulation
C)   privatization
D)   regulatory capture

Exam 11: Monopoly and Antitrust Policy

When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing

Correct Answer
verified

Firms operating under cost-plus regulation have an incentive to generate high costs by building huge factories or employing lots of staff,

Correct Answer
verified

A business _______ occurs when, for practical purposes, one firm purchases another.

Correct Answer
verified

Currently, the approach to antitrust regulation involves

Correct Answer
verified

Briefly explain regulation in the case of a natural monopoly. Provide 3 common examples of regulation. Briefly discuss the benefits of privatization set out in the text and explain what is required for privatization of a nationalized asset in order for privatization to work well.

Correct Answer
verified
In case of a natural monopoly, market c...
View Answer

There have been two especially important shifts in how markets are defined in recent decades: one involves _ and the other involves _.

Correct Answer
verified

What is the maximum value that can be reached using the HHI?

Correct Answer
verified

The term _______ refers to the percentage share of a firm's total sales in the market.

Correct Answer
verified

Why would regulators find that a proposed merger is likely to lessen competition?

Correct Answer
verified

Briefly compare and contrast cost-plus regulation and price cap regulation.

Correct Answer
verified
Cost-plus regulation refers to governmen...
View Answer

The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will

Correct Answer
verified

What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair?

Correct Answer
verified

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers?

Correct Answer
verified

Correct Answer
verified

The term _______ refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow.

Correct Answer
verified

In the 1980s, the FTC followed guidelines stipulating that, should a proposed merger result in an HHI of less than 1,000,

Correct Answer
verified

Following the commencement of deregulation of US airline industry in the 1970s, reduced airfares saved consumers billions of dollar a year however, the more recent string of airline mergers has

Correct Answer
verified

Which of the following is a true statement?

Correct Answer
verified

The four-firm _______ measures the percentage share of the total sales in the Industry that is accounted for by the largest four firms.

Correct Answer
verified

Antitrust laws were created to give government the power to

Correct Answer
verified

Exam 11: Monopoly and Antitrust Policy

When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing

Correct AnswerverifiedShow Answer

Firms operating under cost-plus regulation have an incentive to generate high costs by building huge factories or employing lots of staff,

Correct AnswerverifiedShow Answer

A business _______ occurs when, for practical purposes, one firm purchases another.

Correct AnswerverifiedShow Answer

Currently, the approach to antitrust regulation involves

Correct AnswerverifiedShow Answer

Briefly explain regulation in the case of a natural monopoly. Provide 3 common examples of regulation. Briefly discuss the benefits of privatization set out in the text and explain what is required for privatization of a nationalized asset in order for privatization to work well.

Correct Answerverified In case of a natural monopoly, market c...View AnswerShow Answer

There have been two especially important shifts in how markets are defined in recent decades: one involves _______ and the other involves _______.

Correct AnswerverifiedShow Answer

What is the maximum value that can be reached using the HHI?

Correct AnswerverifiedShow Answer

The term _______ refers to the percentage share of a firm's total sales in the market.

Correct AnswerverifiedShow Answer

Why would regulators find that a proposed merger is likely to lessen competition?

Correct AnswerverifiedShow Answer

Briefly compare and contrast cost-plus regulation and price cap regulation.

Correct AnswerverifiedCost-plus regulation refers to governmen...View AnswerShow Answer

The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will

Correct AnswerverifiedShow Answer

What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair?

Correct AnswerverifiedShow Answer

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The term _______ refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow.

Correct AnswerverifiedShow Answer

In the 1980s, the FTC followed guidelines stipulating that, should a proposed merger result in an HHI of less than 1,000,

Correct AnswerverifiedShow Answer

Following the commencement of deregulation of US airline industry in the 1970s, reduced airfares saved consumers billions of dollar a year however, the more recent string of airline mergers has

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

The four-firm _______ measures the percentage share of the total sales in the Industry that is accounted for by the largest four firms.

Correct AnswerverifiedShow Answer

Antitrust laws were created to give government the power to

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
In case of a natural monopoly, market c...
View Answer

There have been two especially important shifts in how markets are defined in recent decades: one involves _ and the other involves _.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Cost-plus regulation refers to governmen...
View Answer

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