Question 1

The table shows market shares of firms in hypothetical industries.Assume these are distinct industries with no buyer-seller relationships or competition among them.A
Structuralist would most likely assert that there is a violation of antitrust law in which industry?

Accepted Answer

A)  Alpha
B)  Beta
C)  Cappa
D)  DeltaE) A) and D)
F) None of the above

Question 2

The public interest theory of regulation stipulates that government regulation of a natural monopoly is necessary in order to achieve all of the following, except

Accepted Answer

A)  preventing the natural monopoly from harming society through its monopoly pricing.
B)  garnering for society at least part of the cost reductions from being a natural monopoly.
C)  avoiding the reduction in output associated with monopoly power.
D)  eventually breaking up the monopoly to achieve competition within the industry.E) B) and C)
F) A) and B)

Question 3

Antitrust authorities are least likely to take action against

Accepted Answer

A)  conglomerate mergers.
B)  horizontal mergers.
C)  interlocking directorates.
D)  price-fixing.E) A) and C)
F) A) and D)

Question 4

All of the following are regulatory commissions dealing with industrial regulation (as distinct from social regulation)  except the

Accepted Answer

A)  Food and Drug Administration.
B)  Federal Energy Regulatory Commission.
C)  Federal Communications Commission.
D)  50 state public utility commissions.E) C) and D)
F) A) and B)

Question 5

Overall, economists believe that deregulation of industries formerly subjected to industrial regulation

Accepted Answer

A)  has been a clear failure.
B)  is neutral in its impact on society's well-being, creating minimal net benefits at best.
C)  has produced large net benefits for consumers and society.
D)  has produced sizable efficiency gains in the communications industry, but not in the transportation industry (railways, trucking, airlines) .E) B) and C)
F) None of the above

Question 6

In the U.S.Steel case, the court ruled that

Accepted Answer

A)  even though a firm's behavior might be legal, the mere possession of monopoly power was in violation of the Sherman Act.
B)  only monopolies that unreasonably restrain trade are subject to antitrust action under the Sherman Act.
C)  when made by dominant firms, tying contracts are illegal, per se.
D)  the company violated the Clayton Act and therefore should be dissolved into several competing firms.E) All of the above
F) B) and D)

Question 7

Critics of social regulation would argue that it

Accepted Answer

A)  decreases prices.
B)  increases output.
C)  increases competition.
D)  decreases product innovation.E) A) and B)
F) B) and C)

Question 8

If a market is defined more broadly, then the chances that firms in that market will be found to be violating antitrust laws based on the "structuralist" perspective will increase.

Accepted Answer

A) True 
 B)False

Question 9

In the 1982 AT&T antitrust case, the resolution was an out-of-court settlement involving a

Accepted Answer

A)  change in the business practices of AT&T.
B)  cease-and-desist order.
C)  breakup of AT&T into several smaller firms.
D)  takeover of AT&T by another company.E) B) and D)
F) None of the above

Question 10

Which of the following U.S.Supreme Court cases ruled that only monopolies that "unreasonably restrain trade" are violating antitrust laws?

Accepted Answer

A)  DuPont cellophane case of 1956
B)  U.S.Steel case of 1920
C)  Alcoa case of 1945
D)  AT&T case of 1982E) All of the above
F) None of the above

Question 11

A vertical merger involves a combining of one or more firms

Accepted Answer

A)  as the result of one firm purchasing the assets of the other.
B)  that are operating in entirely different industries.
C)  operating at different stages of the production process in a particular industry.
D)  operating at the same stage of the production process.E) A) and B)
F) None of the above

Question 12

Tying agreements

Accepted Answer

A)  establish common boards of directors for previously competing firms.
B)  obligate a purchaser of product X to also buy product Y from the same seller.
C)  allow manufacturers to specify the retail prices of their products.
D)  prohibit firms from selling their products outside of specified geographic areas.E) A) and D)
F) B) and C)

Question 13

Those who may file antitrust lawsuits against violators of the Sherman Act include the following, except

Accepted Answer

A)  injured private parties.
B)  state attorneys general.
C)  the U.S.Department of Labor.
D)  the U.S.Department of Justice.E) A) and B)
F) A) and D)

Question 14

The argument that an industry that is highly concentrated will act like an anticompetitive monopolist would support the case that the application of antitrust laws should be based on industry

Accepted Answer

A)  mergers.
B)  structure.
C)  regulation.
D)  behavior.E) C) and D)
F) A) and B)

Question 15

An example of a horizontal merger is one between an airline and

Accepted Answer

A)  a chain of hotels.
B)  another airline.
C)  an aluminum company.
D)  a car rental company.E) B) and D)
F) All of the above

Question 16

Which of the following cases established that the mere possession of monopoly power violated antitrust laws?

Accepted Answer

A)  IBM case of 1982
B)  Microsoft case of 1998
C)  Alcoa case of 1945
D)  AT&T case of 1982E) None of the above
F) A) and D)

Question 17

The optimal amount of social regulation occurs where the marginal benefit of such regulation

Accepted Answer

A)  equals the marginal cost.
B)  exceeds the marginal cost by the greatest amount.
C)  is zero.
D)  is at its maximum.E) B) and C)
F) B) and D)

Question 18

The Sherman Act

Accepted Answer

A)  was declared unconstitutional in 1895.
B)  provided for government regulation of the railroads.
C)  declared monopoly and restraints of trade to be illegal.
D)  exempted the railroad and communications industries from the antitrust laws.E) A) and B)
F) A) and C)

Question 19

Which antitrust act provided that injured parties could file suit and, if successful, collect triple damages from monopolistic violators?

Accepted Answer

A)  Wheeler-Lea Act
B)  Clayton Act
C)  Sherman Act
D)  Celler-Kefauver ActE) C) and D)
F) B) and C)

Question 20

The Celler-Kefauver Act made vertical mergers legal, provided each firm does not have more than 30 percent of its relevant market.

Accepted Answer

A) True 
 B)False

Exam 21: Antitrust Policy and Regulation

In the 1982 AT&T antitrust case, the resolution was an out-of-court settlement involving a

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A vertical merger involves a combining of one or more firms

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If a market is defined more broadly, then the chances that firms in that market will be found to be violating antitrust laws based on the "structuralist" perspective will increase.

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Critics of social regulation would argue that it

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The optimal amount of social regulation occurs where the marginal benefit of such regulation

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Tying agreements

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The public interest theory of regulation stipulates that government regulation of a natural monopoly is necessary in order to achieve all of the following, except

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Overall, economists believe that deregulation of industries formerly subjected to industrial regulation

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Which of the following cases established that the mere possession of monopoly power violated antitrust laws?

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The Celler-Kefauver Act made vertical mergers legal, provided each firm does not have more than 30 percent of its relevant market.

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An example of a horizontal merger is one between an airline and

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Antitrust authorities are least likely to take action against

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The Sherman Act

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The table shows market shares of firms in hypothetical industries.Assume these are distinct industries with no buyer-seller relationships or competition among them.A Structuralist would most likely assert that there is a violation of antitrust law in which industry?

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Which antitrust act provided that injured parties could file suit and, if successful, collect triple damages from monopolistic violators?

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The argument that an industry that is highly concentrated will act like an anticompetitive monopolist would support the case that the application of antitrust laws should be based on industry

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All of the following are regulatory commissions dealing with industrial regulation (as distinct from social regulation) except the

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In the U.S.Steel case, the court ruled that

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Those who may file antitrust lawsuits against violators of the Sherman Act include the following, except

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Which of the following U.S.Supreme Court cases ruled that only monopolies that "unreasonably restrain trade" are violating antitrust laws?

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