ECON chapter 27

The sherman Antitrust act of 1890 prohibited

Attempts to restrain trade

which antitrust act was passed to protect independent retailers from unfair discrimination by chain stores

robinson- patman act

suppose a dangerous workplace is made safer through the instillation of guards and other equipment that reduce they physical hazards of the work environment. If we observe no reduction in injuries than, we might conclude that

workers responded to the safer environment by not exercising as much care themselves, generating more injuries than if they had not changed their behavior.

In the above figure, if the monopolist engages in marginal cost pricing, what are its output and price?

1,200 , $3

which of the following is NOT an exempt from antitrust laws?

Airlines

in the above figure, if this natural monopolist were forced to use marginal cost pricing, it would sell the product at the price

F

in marginal cost pricing, the natural monopoly would have to set price equal to

MC

refer to the above figure. What are the price and quantity if this monopolist is required to use rate-of-return or average cost pricing

P3,Q3

a regulated natural monopolist allowed to earn fair rate of return would produce to the point at which

P= LAC

the hypothesis that regulators eventually are controlled by the regulated firms and their special interests is the

capture hypothesis

which of the following best describes the difference between cost of service regulation and rate of return regulation

cost determine prices in cost-of-service regulation and prices are set in rate-of-return regulation so the firm can make a normal rate of return.

the possession of monopoly power and the willful acquisition of that power is

defined by the supreme court as monopolization

a firm that responds to a regulatory rule in a way that permits technical compliance while allowing the firm to violate the spirit of the regulation has

engaged in a creative response to regulation

the primary motive of regulators, according to the share-the -gains, share-the-pains theory is to

keep their jobs

the potential for asymmetric information ti bring about a general decline in product quality in an industry is known as the ----- problem

lemons

the two most important rationales for government intervention in non-monopolistic markets are

market failure and asymmetric information

this agency regulates workplace safety and health conditions

occupational safety and health administration

The main goal of antitrust policy is to

prevent the monopolization of industries

which of the following is illegal according to the antitrust laws

price fixing

which of the following is a possible market solution to the lemons problem

producers might offer product guarantees and warranties

enforcement of antitrust policy is the responsibility of

the federal trade commission and the antitrust division of the department of justice.

In some cases, social regulation may alter individuals behavior. For example, there is evidence to indicate that as more automobile safety regulations have been introduced, more individuals have begun to drive recklessly. This phenomenon is known as

the feedback effect

under rate-of-return regulation, the price is set so that

the firm earns a normal rate of return on investment.

suppose that a regulatory agency has imposed marginal cost pricing on a natural monopolist. We expect that

the firm will eventually go out of business

according to US antitrust enforcement gudelines, a merger is likely to be challenged if

the industry after the merger an HH I above 1,800 and the HH rises by more than 50.

under the US system of regulation, most regulators are selected from

the industry that is to be regualted

the supreme court's decision in the Standard oil of new jersey case was

to break up the company

the purpose of social regulation is

to focus on the impact of production on the envioronment and society , the working conditions under which goods and services are produced, and sometimes the physical attributes of goods.

the act of selling an item in slightly altered forms at different prices and to different groups of consumers is known as

versioning