Question 1

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

Accepted Answer

A)  bundling.
B)  versioning.
C)  tie-in sales.
D)  lemons marketing.E) A) and C)
F) A) and B)

Question 2

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

Accepted Answer

A)  the feedback effect.
B)  the share-the-gains effect.
C)  the share-the-pains effect.
D)  the capture effect.E) None of the above
F) A) and B)

Question 3

One type of economic regulation often used in the United States by various public utility commissions allows prices to reflect only the actual cost of production and no monopoly profits.This type of economic regulation is known as

Accepted Answer

A)  rate-of-return regulation.
B)  cost-of-service regulation.
C)  price per constant-quality-unit regulation.
D)  creative response regulation.E) A) and C)
F) A) and D) B

Question 4

The major goal of social regulation is

Accepted Answer

A)  a better quality of life through a less polluted environment,better working conditions,and safer and better products.
B)  to make sure that firms are not earning monopoly profits.
C)  to make sure that prices are kept low enough so that every person can purchase the good.
D)  to make sure that the firm produces at the socially optimal point of production.E) A) and C)
F) None of the above

Question 5

Acme Inc.found a tricky way to conform to the letter of the law with respect to new EPA regulations,even though they violated the spirit of the law.This is called

Accepted Answer

A)  the capture theory.
B)  collusive response.
C)  share-the-gains,share-the-pains theory.
D)  creative response.E) B) and C)
F) None of the above

Question 6

If a public service commission requires a natural monopoly to set its price equal to the long-run marginal cost,this will result in

Accepted Answer

A)  excessive economic profits to the monopoly.
B)  normal economic profits to the monopoly.
C)  losses to the monopoly.
D)  either economic profits or losses,depending on the efficiency of the monopoly.E) A) and B)
F) C) and D)

Question 7

Under rate-of-return regulation,natural monopolies must use

Accepted Answer

A)  marginal cost pricing.
B)  average cost pricing.
C)  efficient pricing.
D)  monopoly pricing.E) B) and C)
F) All of the above

Question 8

A natural monopoly owes its existence to

Accepted Answer

A)  control of a key input.
B)  persistently declining long-run average costs as scale increases.
C)  patents.
D)  increasing marginal returns and the ability to obtain quantity discounts from suppliers.E) A) and B)
F) All of the above

Question 9

For a firm to be economically efficient from society's point of view,it should produce to the point at which

Accepted Answer

A)  marginal cost equals marginal revenue.
B)  marginal cost equals average total cost.
C)  marginal cost equals price.
D)  average total cost equals price.E) B) and C)
F) C) and D)

Question 10

The Sherman Act

Accepted Answer

A)  prohibited banks from crossing states lines.
B)  prohibited railroads from transporting explosives.
C)  provided for the regulation of natural monopolies.
D)  declared that monopolization and restraint of trade were illegal.E) All of the above
F) B) and C)

Question 11

In a court decision in June 2001,the Federal District Count of Appeals in Washington,D.C.found that Microsoft had violated the

Accepted Answer

A)  Clayton Act.
B)  Robinson-Patman Act.
C)  Sherman Act.
D)  Celler-Kefauver Act.E) All of the above
F) B) and C)

Question 12

The first antitrust law that the U.S.Congress enacted was

Accepted Answer

A)  the Clayton Antitrust Act.
B)  the Sherman Antitrust Act.
C)  the Robinson-Patman Act.
D)  the Federal Trade Commission Act.E) B) and D)
F) All of the above

Question 13

-In the above figure,what would be the profit or loss at the marginal cost pricing point for this natural monopolist?

Accepted Answer

A)  -$300
B)  $2,700
C)  $2,100
D)  -$1,200E) A) and B)
F) C) and D) D

Question 14

This agency develops and enforces environmental standards for air,water,toxic waste,and noise.

Accepted Answer

A)  Environmental Protection Agency
B)  Consumer Product Safety Commission
C)  Equal Employment Opportunity Commission
D)  Occupational Safety and Health AdministrationE) B) and C)
F) None of the above

Question 15

Ajax Corporation has just started advertising that there are 16 ounces in every package.In reality the packages contain only 14 ounces.This misleading advertising

Accepted Answer

A)  is in violation of the Robinson-Patman Act.
B)  is exempt from the antitrust laws.
C)  could be subject to an investigation by the Federal Trade Commission.
D)  could be subject to an investigation by the Sherman Commission.E) B) and D)
F) B) and C)

Question 16

The U.S.Justice Department prosecuted Microsoft under the terms of

Accepted Answer

A)  the Sherman Act.
B)  the Kefauver amendment.
C)  the 1933 amendment to the Federal Trade Commission Act.
D)  none of the above.E) None of the above
F) A) and D)

Question 17

The law passed by Congress in 1914 that was designed to sharpen or define further the vagueness of the Sherman Act is called

Accepted Answer

A)  the Robinson-Patman Act.
B)  the Wheeler-Lea Act.
C)  the Clayton Act.
D)  the Federal Trade Commission Act.E) A) and B)
F) All of the above

Question 18

Behavior on the part of the firm that allows it to comply with the letter of the law but violate the spirit reducing the law's effect is

Accepted Answer

A)  asymmetric information.
B)  creative response.
C)  the lemons problem.
D)  only a problem in a monopoly.E) B) and D)
F) A) and B)

Question 19

Which of the following best describes the difference between cost-of-service regulation and rate-of-return regulation?

Accepted Answer

A)  Costs determine prices in cost-of-service regulation and prices determine costs in rate-of-return regulation.
B)  Costs 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.
C)  Variable costs determine prices in cost-of-service regulation and prices are set in rate-of-return regulation so the firm can make an economic profit.
D)  Regulators determine prices in cost-of-service regulation and market forces determine prices in rate-of-return regulation.E) None of the above
F) B) and D) B

Question 20

The benefits of social regulation usually are

Accepted Answer

A)  small.
B)  obvious to people while the costs are hidden.
C)  less than the costs of social regulation,reducing overall welfare.
D)  difficult to measure.E) C) and D)
F) B) and C)

Exam 14: Regulation and Antitrust Policy in a Globalized Economy

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One type of economic regulation often used in the United States by various public utility commissions allows prices to reflect only the actual cost of production and no monopoly profits.This type of economic regulation is known as

Correct AnswerverifiedB

The major goal of social regulation is

Correct AnswerverifiedShow Answer

Acme Inc.found a tricky way to conform to the letter of the law with respect to new EPA regulations,even though they violated the spirit of the law.This is called

Correct AnswerverifiedShow Answer

If a public service commission requires a natural monopoly to set its price equal to the long-run marginal cost,this will result in

Correct AnswerverifiedShow Answer

Under rate-of-return regulation,natural monopolies must use

Correct AnswerverifiedShow Answer

A natural monopoly owes its existence to

Correct AnswerverifiedShow Answer

For a firm to be economically efficient from society's point of view,it should produce to the point at which

Correct AnswerverifiedShow Answer

The Sherman Act

Correct AnswerverifiedShow Answer

In a court decision in June 2001,the Federal District Count of Appeals in Washington,D.C.found that Microsoft had violated the

Correct AnswerverifiedShow Answer

The first antitrust law that the U.S.Congress enacted was

Correct AnswerverifiedShow Answer

-In the above figure,what would be the profit or loss at the marginal cost pricing point for this natural monopolist?

Correct AnswerverifiedD

This agency develops and enforces environmental standards for air,water,toxic waste,and noise.

Correct AnswerverifiedShow Answer

Ajax Corporation has just started advertising that there are 16 ounces in every package.In reality the packages contain only 14 ounces.This misleading advertising

Correct AnswerverifiedShow Answer

The U.S.Justice Department prosecuted Microsoft under the terms of

Correct AnswerverifiedShow Answer

The law passed by Congress in 1914 that was designed to sharpen or define further the vagueness of the Sherman Act is called

Correct AnswerverifiedShow Answer

Behavior on the part of the firm that allows it to comply with the letter of the law but violate the spirit reducing the law's effect is

Correct AnswerverifiedShow Answer

Which of the following best describes the difference between cost-of-service regulation and rate-of-return regulation?

Correct AnswerverifiedB

The benefits of social regulation usually are

Correct AnswerverifiedShow Answer

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B

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D

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B

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