Question 1

A firm charged with monopolizing a market is less likely to be convicted if

Accepted Answer

A)  the court accepts a broad definition of the market.
B)  the court accepts a narrow definition of the market.
C)  it has gained its monopoly through abusive means.
D)  it sells its product to other firms, rather than directly to consumers.E) C) and D)
F) None of the above

Question 2

Critics of social regulation argue that it

Accepted Answer

A)  causes deflation.
B)  violates the due process clause of the U.S.Constitution.
C)  is a relatively greater burden for small firms than for large firms.
D)  improves allocative efficiency.E) None of the above
F) A) and B)

Question 3

In the Alcoa case of 1945, the courts held that

Accepted Answer

A)  the mere possession of monopoly power is a violation of the antitrust laws.
B)  only contracts and combinations that unreasonably restrain trade are in violation of the Sherman Act.
C)  retail and wholesale firms are exempt from antitrust legislation.
D)  firms that sell more than one-half of their output overseas are exempt from antitrust.E) A) and D)
F) A) and C)

Question 4

Which of the following findings would be the most likely to lead the U.S.Justice Department to block a corporate merger under terms of the Clayton Act?

Accepted Answer

A)  a buyer-seller relationship between the two firms
B)  a high premerger Herfindahl index in the industry and a large boost in the index because of the merger
C)  a low pre- and postmerger concentration ratio in the industry
D)  evidence that one of the firms is highly unprofitableE) A) and D)
F) B) and C)

Question 5

Which of the following is characteristic of a regulated natural monopoly?

Accepted Answer

A)  extensive economies of scale
B)  the wasteful duplication of capital facilities in the event of competition
C)  the provision of an essential service
D)  all of theseE) A) and D)
F) A) and C)

Question 6

The view that the antitrust laws need to be strongly enforced to prevent illegal business behaviors, monopolization of markets, and allocative inefficiency is known as the

Accepted Answer

A)  structuralist view of antitrust.
B)  behavioralist view of antitrust.
C)  laissez-faire perspective on antitrust.
D)  active antitrust perspective.E) A) and D)
F) B) and C)

Question 7

If the government regulates a natural monopoly and sets a "fair return" pricing policy, then the regulated firm will have greater incentive to improve its operating efficiency.

Accepted Answer

A) True 
 B)False

Question 8

If economies of scale in an industry are so extensive that a single firm could serve the entire market at a lower cost than if the market was split between two or more firms, this industry is called a(n)

Accepted Answer

A)  conglomerate
B)  natural monopoly.
C)  oligopoly.
D)  restraint of trade.E) B) and D)
F) A) and B)

Question 9

Which of the following beliefs is not strongly espoused by the "active antitrust perspective" in policy enforcement?

Accepted Answer

A)  Firms occasionally use illegal tactics to gain over competitors.
B)  Antitrust authorities must act like officials in a football game.
C)  Competition and creative destruction could lead to monopolies.
D)  When competition is insufficient, allocative inefficiencies will occur.E) None of the above
F) B) and C)

Question 10

Legislation designed to regulate natural monopolies would be based on which theory of regulation?

Accepted Answer

A)  social
B)  legal cartel
C)  public interest
D)  price-fixingE) A) and B)
F) C) and D)

Question 11

Which one of the following acts declared "every contract, combination ...or conspiracy, in restraint of trade or commerce among the several states ...to be illegal"?

Accepted Answer

A)  the Wheeler-Lea Act
B)  the Federal Trade Commission Act
C)  the Sherman Act
D)  the Interstate Commerce ActE) A) and D)
F) B) and D)

Question 12

Supporters of social regulation contend that it has provided net benefits to society in the form of greater safety, a better environment, and less discrimination.

Accepted Answer

A) True 
 B)False

Question 13

Price-fixing

Accepted Answer

A)  is prohibited by Section 7 of the Clayton Act.
B)  is a per se violation of the antitrust laws.
C)  may be either legal or illegal depending on whether or not it produces above-normal profits.
D)  is illegal under terms of the Federal Trade Commission Act.E) None of the above
F) C) and D)

Question 14

The legislation that prohibited acquisition of stock of another company if this would significantly lessen competition is the

Accepted Answer

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

Question 15

A merger between McDonald's and Burger King would be an example of a

Accepted Answer

A)  conglomerate merger.
B)  horizontal merger.
C)  vertical merger.
D)  parallel merger.E) A) and B)
F) A) and C)

Question 16

Suppose the courts declare that XYZ Corporation violated the antitrust laws and as a result ABC Corporation lost $100 million of profits.XYZ Corporation will have to pay ABC Corporation a monetary award of

Accepted Answer

A)  $100 million.
B)  $33.3 million.
C)  $150 million.
D)  $300 million.E) A) and C)
F) B) and C)

Question 17

Movie producers A, B, and C secretly meet and agree to release their summer blockbuster films in sequence, rather than at the same time.The U.S.Justice Department learns of the agreement and files an antitrust suit.The federal government would most likely file charges under the

Accepted Answer

A)  Sherman Act, Section 1.
B)  Sherman Act, Section 2.
C)  Clayton Act.
D)  Federal Trade Commission Act.E) B) and D)
F) C) and D)

Question 18

Tying agreements are contracts by which retailers agree to charge the prices that manufacturers set on branded goods.

Accepted Answer

A) True 
 B)False

Question 19

In recent years, the strictest application of antitrust laws has been for

Accepted Answer

A)  breaking up firms with monopoly power.
B)  prosecuting firms for price-fixing activity.
C)  blocking vertical mergers.
D)  limiting foreign competition.E) None of the above
F) B) and C)

Question 20

(Last Word)  In 2015, Google was indicted by European Union antitrust officials for

Accepted Answer

A)  conspiring with Microsoft to ensure that Google and Microsoft products were bundled.
B)  using its 90 percent share of the Internet search market to favor its own price-comparison service.
C)  using pricing algorithms to price-fix with other Internet sellers.
D)  using its monopoly power to require all computers sold in Europe to support Google Chrome.E) A) and D)
F) All of the above

Exam 21: Antitrust Policy and Regulation

Suppose the courts declare that XYZ Corporation violated the antitrust laws and as a result ABC Corporation lost $100 million of profits.XYZ Corporation will have to pay ABC Corporation a monetary award of

Correct AnswerverifiedShow Answer

If economies of scale in an industry are so extensive that a single firm could serve the entire market at a lower cost than if the market was split between two or more firms, this industry is called a(n)

Correct AnswerverifiedShow Answer

Which of the following beliefs is not strongly espoused by the "active antitrust perspective" in policy enforcement?

Correct AnswerverifiedShow Answer

Price-fixing

Correct AnswerverifiedShow Answer

The view that the antitrust laws need to be strongly enforced to prevent illegal business behaviors, monopolization of markets, and allocative inefficiency is known as the

Correct AnswerverifiedShow Answer

In recent years, the strictest application of antitrust laws has been for

Correct AnswerverifiedShow Answer

Which of the following is characteristic of a regulated natural monopoly?

Correct AnswerverifiedShow Answer

Supporters of social regulation contend that it has provided net benefits to society in the form of greater safety, a better environment, and less discrimination.

Correct AnswerverifiedShow Answer

A merger between McDonald's and Burger King would be an example of a

Correct AnswerverifiedShow Answer

Movie producers A, B, and C secretly meet and agree to release their summer blockbuster films in sequence, rather than at the same time.The U.S.Justice Department learns of the agreement and files an antitrust suit.The federal government would most likely file charges under the

Correct AnswerverifiedShow Answer

Which one of the following acts declared "every contract, combination ...or conspiracy, in restraint of trade or commerce among the several states ...to be illegal"?

Correct AnswerverifiedShow Answer

A firm charged with monopolizing a market is less likely to be convicted if

Correct AnswerverifiedShow Answer

Tying agreements are contracts by which retailers agree to charge the prices that manufacturers set on branded goods.

Correct AnswerverifiedShow Answer

Which of the following findings would be the most likely to lead the U.S.Justice Department to block a corporate merger under terms of the Clayton Act?

Correct AnswerverifiedShow Answer

(Last Word) In 2015, Google was indicted by European Union antitrust officials for

Correct AnswerverifiedShow Answer

Legislation designed to regulate natural monopolies would be based on which theory of regulation?

Correct AnswerverifiedShow Answer

In the Alcoa case of 1945, the courts held that

Correct AnswerverifiedShow Answer

Critics of social regulation argue that it

Correct AnswerverifiedShow Answer

If the government regulates a natural monopoly and sets a "fair return" pricing policy, then the regulated firm will have greater incentive to improve its operating efficiency.

Correct AnswerverifiedShow Answer

The legislation that prohibited acquisition of stock of another company if this would significantly lessen competition is the

Correct AnswerverifiedShow Answer

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