Chapter 14

A monopolistic industry will have a Herfindahl index value of: a.) 1 b.) 100 c.) 500 d.)1,000 e.) 10

1,000

which of the following is possible reason for gov. to regulate business operations? a.) to increase monopoly profits b.) to reduce the amount of information consumers have about a product c.) to increase negative externalities d.) to promote competitive behavior e.) to decrease positive externalities

to promote competitive behavior

which of the following calculations is necessary to determine weather a regulation should be implemented? a.) Marginal cost - marginal rev. calculation b.) Cost effectiveness calculations c.) Total cost- total rev. calculations d.) Cost minimization calculations e.) Cost - benefit calculations

Cost - benefit calculations

Which of the following is not a component of the index which measures economic freedom of a country? a.) Monetary freedom b.) Cultural freedom c.) Gov. size d.) Freedom from couroption e.) Labor freedom

Cultural freedom

Which of the following is most likely to happen if the Federal Trade Commission (FTC) wins a suite against alleged violators of antitrust law? a.) FTC will receive compensation up to 3x the damages caused b.) FTC will not be able to impose substantial penalties c.) FTC will force firms to break up through dissolution d.) FTC will force firms to merge together e.) FTC will file criminal actions that may result in fines but not prison sentences

FTC will force firms to break up through dissolution

Which of the following practices is restricted by the antitrust laws of the U.S a.) Merger of smaller firms into larger firm b.) Entry of new firms in the long run c.) Standardization of products in a market d.) Exit of non-performing firms in the long run e.) Quality differentiation by competitive firms

Merger of smaller firms into larger firm

Which of the following raises the economic freedom of a country? a.) Limited international movement of productive resources b.) Higher taxes c.) Red-tapism and bureaucracy d.) Reduction of trade barriers like tariffs and quotas e.) Reduction of government subsides on gasoline

Reduction of trade barriers like tariffs and quotas

Which of the following are three laws that define the U.S government's approach to antitrust? a.) The Wilmington, Jackson, and International Trade Commission Acts b.) The Springfield, Clayton, and Trade Commission Acts c.) The Sherman, Clayton, and Federal trade Commissions Act d.) The Sherman, Jackson, and Regional Trade Commission Acts e.) The Jackson, Charleston, and Sherman Monopoly Restrictive Trade Acts

The Sherman, Clayton, and Federal Trade Commissions Act

The antitrust laws in the U.S. were created in the late 1800s as a result of: a.) The emergence of large and dominant businesses in railroads, steel, oil, mining, and finance b.) the gov. decision to take responsibility for the improvement of trade deficit c.) the first illegal cartel, created in late 1800s d.) a steep decline in prices of primary goods in the U.S e.) The threats of an external aggression received by the country.

The emergence of large and dominant businesses in railroads, steel, oil, mining, and finance

A market is said to be concentrated when: a.) a degree of competition in the market increases b.) many firms supply to a small number of consumers c.) the firms producing identical goods are clustered in a particular location d.) a firm or a few firms are able to dictate the competitive conditions in a market e.) there is a huge immigration of workers from neighboring areas

a firm or a few firms are able to dictate the competitive conditions in a market

Under the second phase of the antitrust policy that began in 1914 in the U.S., the courts used ________ in order to judge the firms' actions. a.) a rule of reason b.) the rule of 72 c.) a rule of thirds d.) a per se rule e.) the rule of law

a per se rule

The first phase of antitrust policy in the U.S. began with the passage of the Sherman Antitrust Act in 1890. To judge a firm's action, the courts in this period used: a.) a per se rule b.) a rule of reason c.) a rule of thumb d.) rules of order e.) strict enforcement rule

a rule of reason

Under George W. Bush's administration, antitrust policy: a.) became much more strict b.) prohibited every merger attempts c.) focused increasingly on environmental concerns d.) became more relaxed e.) ignored financial regulations and corporate scandals.

became more relaxed

Antitrust policy is used to describe government policies and programs that are designed to: a.) promote the creation of trusts, or combinations of independent firms b.) control the growth of monopoly and enhance competition c.) deal with the threat of competitive practiced to public interests d.) create an environment in which the gov. will distrust firms e.) create an environment in which firms will distrust the go.

control the growth of monopoly and enhance competition

Which of the following statements is true of price fixing? a.) it represents a high level of competition in an industry b.) it is allowed only under the provisions of the Federal Trade Commission Act c.) it is by definition, illegal, as there is no justification for it d.) it occurs only in perfectly competitive industries e.) it is legal in the U.S.

it is by definition, illegal, as there is no justification for it

Monetary freedom refers to: a.) the ability to create and operate an enterprise easily b.) the absence of tariff an non-tariff barriers that affect imports of goods. c.) the tax burden and overall tax revenue of the gov. d.) price stability with an assessment of price control e.) the free flow of foreign capital

price stability with an assessment of price control

The most reliable measure of market concentration is: a.) the cost of living index b.) the herfindahl- hirschman indes c.) the market index d.) the market-value weighted index e.) the wholesale price index

the Herfindahl-Hirschman index

which of the following factors will help determine how the cost of social regulation are split between consumers and producers? a.) the price elasticities of the demand and supply b.) the quantity produce by the firm c.) the average total cost of the firm before regulation d.) the number of consumers in the market e.) the number of producers in the market

the price elasticities of the demand and supply

The judicial doctrine, being a monopoly or attempting to monopolize is not in itself illegal; to be illegal, an action had to be shown to have negative economic effects, is called: a.) the "big is bad" policy b.) the per se rule c.) predatory price-cutting policy d.) the rule of law e.) the rule of reason

the rule of reason

Delegates from different countries of the world met at Geneva in April 1947 which resulted in the formation of the first global trade agreement. Its main objective was: a.) to create multiple trade barriers in the member countries b.) to enable the member countries to maintain their autarkic conditions c.) to provide security to the domestic producers of the member countries by prohibiting international trade d.) to create an atmosphere of economic rivalry in the international sphere e.) to liberalize trade for mutual prosperity of the members

to create an atmosphere of economic rivalry in the international sphere