Question 1

Answer the question on the basis of the following table showing market shares of firms in hypothetical industries.Assume these are distinct industries with no buyer-seller relationships or competition among them.   Market Share of Firms in Industry \begin{array}{c}&&	ext { Market Share of Firms in Industry }\end{array}​​ Market Share of Firms in Industry ​ 
 IndustryAlphaBetaCappaDelta12345630302020−−−−8010531125252525−−−−202020201010\begin{array}{c}\begin{array}{lll}\Industry\Alpha\Beta\Cappa\Delta\\end{array}\begin{array}{lll}\1&2&3&4&5&6\30&30&20&20&--&--\80&10&5&3&1&1\25&25&25&25&--&--\20&20&20&20&10&10\end{array}\end{array}IndustryAlphaBetaCappaDelta​130802520​230102520​32052520​42032520​5−−1−−10​6−−1−−10​​  Refer to the table.A merger between Firm 2 and Firm 3 in Alpha would be a:

Accepted Answer

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

Question 2

Which one of the following is concerned with industrial regulation,as distinct from social regulation?

Accepted Answer

A)   Occupational Safety and Health Administration.
B)   Consumer Products Safety Commission.
C)   Federal Communications Commission.
D)   Environmental Protection Agency.E) None of the above
F) A) and D)

Question 3

A merger of several firms operating in different industries-for example,a trucking company,a fast-food chain,and a brokerage house-is called:

Accepted Answer

A)   an integrated merger.
B)   a conglomerate merger.
C)   a vertical merger.
D)   a horizontal merger.E) A) and B)
F) A) and C)

Question 4

Critics of the regulation of natural monopolies contend that:

Accepted Answer

A)   regulation increases the incentive of firms to lower costs.
B)   regulated firms may use creative accounting to reduce costs,prices,and profits.
C)   when rates of return are based on the value of real capital,an uneconomic substitution of labor for capital may occur.
D)   the industry may "capture" or control the regulatory commission.E) A) and B)
F) None of the above

Question 5

Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger.The U.S.Justice Department concludes the merger will boost the index to 1,050.The antitrust authorities will most likely:

Accepted Answer

A)   ignore this merger because of the relatively small size of,and increase in,the Herfindahl index.
B)   prevent the merger,contending that it violates the Clayton Act.
C)   allow the merger if foreign entry to the industry is possible.
D)   allow the merger but watch the new firm carefully for future violations of the antitrust laws.E) A) and D)
F) A) and B) A

Question 6

Proposed ergonomics regulations are an example of industrial regulation (rather than social regulation).

Accepted Answer

A) True 
 B)False

Question 7

The government was successful in gaining an antitrust conviction in the:

Accepted Answer

A)   U.S.Steel case.
B)   IBM case.
C)   Alcoa case.
D)   DuPont cellophane case.E) A) and D)
F) B) and D)

Question 8

(Last Word) In 2001,Microsoft was found guilty of violating:

Accepted Answer

A)   Section 7 of the Clayton Act.
B)   Sections 1 and 2 of the Sherman Act.
C)   the Federal Trade Commission Act.
D)   Section 20 of the Wagner Act.E) A) and C)
F) B) and C)

Question 9

A major criticism of industrial regulation is that:

Accepted Answer

A)   it has been applied to virtually all major U.S.corporations in the post-Second World War period.
B)   marginal cost pricing has created an underallocation of resources.
C)   by allowing a fair return price,it gives natural monopolists little incentive to contain costs.
D)   regulatory commissions have frequently caused natural monopolies to go bankrupt.E) B) and C)
F) None of the above

Question 10

Monopolization is illegal under Section 1 of the Sherman Act.

Accepted Answer

A) True 
 B)False  False

Question 11

Answer the question on the basis of the following table showing market shares of firms in hypothetical industries.Assume these are distinct industries with no buyer-seller relationships or competition among them.   Market Share of Firms in Industry \begin{array}{c}&&	ext { Market Share of Firms in Industry }\end{array}​​ Market Share of Firms in Industry ​ 
 IndustryAlphaBetaCappaDelta12345630302020−−−−8010531125252525−−−−202020201010\begin{array}{c}\begin{array}{lll}\Industry\Alpha\Beta\Cappa\Delta\\end{array}\begin{array}{lll}\1&2&3&4&5&6\30&30&20&20&--&--\80&10&5&3&1&1\25&25&25&25&--&--\20&20&20&20&10&10\end{array}\end{array}IndustryAlphaBetaCappaDelta​130802520​230102520​32052520​42032520​5−−1−−10​6−−1−−10​​  Refer to the table.A merger between Firm 1 in Alpha and Firm 2 in Delta would be a:

Accepted Answer

A)   vertical merger.
B)   horizontal merger.
C)   conglomerate merger.
D)   diagonal merger. E) A) and D)
F) All of the above C

Question 12

The legal cartel theory of regulation argues that:

Accepted Answer

A)   regulation encourages firms to inflate their production costs.
B)   firms in certain industries want to be regulated rather than face the rigors of competition.
C)   social regulation has been carried beyond the point at which marginal benefits and marginal costs are equal.
D)   the government is the logical agency to protect consumers from natural monopolies.E) A) and C)
F) All of the above

Question 13

A merger between a maker of household detergents and a fast-food chain would be an example of:

Accepted Answer

A)   a horizontal merger.
B)   an interlocking directorate.
C)   a conglomerate merger.
D)   a tying contract.E) None of the above
F) B) and C)

Question 14

Price-fixing is illegal under Section 1 of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 15

(Consider This) According to the Consider This box on catfish and art,which of the following airlines in 2007 agreed to pay $300 million in fines for fixing fuel surcharges on passenger tickets and cargo?

Accepted Answer

A)   Korean Air and British Airlines.
B)   Qantas and Lufthansa.
C)   United Airlines and American Airlines.
D)   Virgin Atlantic and Aeroflot.E) B) and D)
F) C) and D)

Question 16

(Last Word) In 2001,a U.S.court of appeals tossed out an earlier U.S.district court order that Microsoft:

Accepted Answer

A)   license Windows for sale by competitors.
B)   be split into two competing firms.
C)   divest itself of its Word and PowerPoint software programs.
D)   end its proposed acquisition of Sun Microsystems.E) All of the above
F) A) and B)

Question 17

Social regulation differs from industrial regulation in that:

Accepted Answer

A)   social regulation applies to virtually all industries,while industrial regulation applies to a restricted number.
B)   industrial regulation is involved in the details of the production process,while social regulation is not.
C)   social regulation has expanded less rapidly in recent years than has industrial regulation.
D)   industrial regulation regulates products whereas social regulation regulates prices.E) A) and D)
F) A) and C)

Question 18

The basic issue in the DuPont cellophane case was:

Accepted Answer

A)   whether trade crossed state lines.
B)   defining the relevant market.
C)   structure versus behavior.
D)   the rule of reason.E) B) and C)
F) A) and D)

Question 19

The view that the antitrust laws should be enforced relatively leniently because of the tendency for monopoly power to erode over time 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) C) and D)
F) A) and B)

Question 20

Congressional representatives have called for extensive ergonomics regulations to reduce strains and injuries from repetitive activities by workers.Such regulation,if passed,would be a good example of:

Accepted Answer

A)   industrial regulation.
B)   the principal-agent problem.
C)   the free-rider problem.
D)   social regulation.E) B) and D)
F) B) and C)

Exam 20: Antitrust Policy and Regulation

Correct Answer
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Which one of the following is concerned with industrial regulation,as distinct from social regulation?

Correct Answer
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A merger of several firms operating in different industries-for example,a trucking company,a fast-food chain,and a brokerage house-is called:

Correct Answer
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Critics of the regulation of natural monopolies contend that:

Correct Answer
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Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger.The U.S.Justice Department concludes the merger will boost the index to 1,050.The antitrust authorities will most likely:

Correct Answer
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A

Proposed ergonomics regulations are an example of industrial regulation (rather than social regulation).

Correct Answer
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The government was successful in gaining an antitrust conviction in the:

Correct Answer
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(Last Word) In 2001,Microsoft was found guilty of violating:

Correct Answer
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A major criticism of industrial regulation is that:

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Monopolization is illegal under Section 1 of the Sherman Act.

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False

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C

The legal cartel theory of regulation argues that:

Correct Answer
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A merger between a maker of household detergents and a fast-food chain would be an example of:

Correct Answer
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Price-fixing is illegal under Section 1 of the Sherman Act.

Correct Answer
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(Consider This) According to the Consider This box on catfish and art,which of the following airlines in 2007 agreed to pay $300 million in fines for fixing fuel surcharges on passenger tickets and cargo?

Correct Answer
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(Last Word) In 2001,a U.S.court of appeals tossed out an earlier U.S.district court order that Microsoft:

Correct Answer
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Social regulation differs from industrial regulation in that:

Correct Answer
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The basic issue in the DuPont cellophane case was:

Correct Answer
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The view that the antitrust laws should be enforced relatively leniently because of the tendency for monopoly power to erode over time is known as the:

Correct Answer
verified

Congressional representatives have called for extensive ergonomics regulations to reduce strains and injuries from repetitive activities by workers.Such regulation,if passed,would be a good example of:

Correct Answer
verified

Exam 20: Antitrust Policy and Regulation

Correct AnswerverifiedShow Answer

Which one of the following is concerned with industrial regulation,as distinct from social regulation?

Correct AnswerverifiedShow Answer

A merger of several firms operating in different industries-for example,a trucking company,a fast-food chain,and a brokerage house-is called:

Correct AnswerverifiedShow Answer

Critics of the regulation of natural monopolies contend that:

Correct AnswerverifiedShow Answer

Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger.The U.S.Justice Department concludes the merger will boost the index to 1,050.The antitrust authorities will most likely:

Correct AnswerverifiedA

Proposed ergonomics regulations are an example of industrial regulation (rather than social regulation).

Correct AnswerverifiedShow Answer

The government was successful in gaining an antitrust conviction in the:

Correct AnswerverifiedShow Answer

(Last Word) In 2001,Microsoft was found guilty of violating:

Correct AnswerverifiedShow Answer

A major criticism of industrial regulation is that:

Correct AnswerverifiedShow Answer

Monopolization is illegal under Section 1 of the Sherman Act.

Correct AnswerverifiedFalse

Correct AnswerverifiedC

The legal cartel theory of regulation argues that:

Correct AnswerverifiedShow Answer

A merger between a maker of household detergents and a fast-food chain would be an example of:

Correct AnswerverifiedShow Answer

Price-fixing is illegal under Section 1 of the Sherman Act.

Correct AnswerverifiedShow Answer

(Consider This) According to the Consider This box on catfish and art,which of the following airlines in 2007 agreed to pay $300 million in fines for fixing fuel surcharges on passenger tickets and cargo?

Correct AnswerverifiedShow Answer

(Last Word) In 2001,a U.S.court of appeals tossed out an earlier U.S.district court order that Microsoft:

Correct AnswerverifiedShow Answer

Social regulation differs from industrial regulation in that:

Correct AnswerverifiedShow Answer

The basic issue in the DuPont cellophane case was:

Correct AnswerverifiedShow Answer

The view that the antitrust laws should be enforced relatively leniently because of the tendency for monopoly power to erode over time is known as the:

Correct AnswerverifiedShow Answer

Congressional representatives have called for extensive ergonomics regulations to reduce strains and injuries from repetitive activities by workers.Such regulation,if passed,would be a good example of:

Correct AnswerverifiedShow Answer

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A

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False

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C

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