40) Which antitrust law prohibits all conspiracies in restraint of trade and all
ID: 1164553 • Letter: 4
Question
40)
Which antitrust law prohibits all conspiracies in restraint of trade and all attempts to monopolize industries?
(2pts)
Celler-Kefauver Act
Clayton Act
Wheeler-Lea Act
Sherman Act
Robinson-Patman Act
41)
The Herfindahl Index is equal to the
(2pts)
sum of the market shares of the 100 largest firms in the industry.
square root of the sum of the market shares of the four largest firms in the industry.
sum of the square roots of the market shares of each firm in the industry.
sum of the squares of the market shares of each firm in the industry.
square of the sum of the market shares of all the firms in the industry.
42)
Which theory of regulation holds that regulators are seeking to do, and will do through regulation, what is in their own best interest?
(2pts)
self-interest theory
public policy theory
public choice theory
public interest theory
capture theory
43)
The situation when a product or technology becomes the standard and is difficult or impossible to dislodge as the standard is called the _______ effect.
(2pts)
network
lock-in
sticky standard
merger
contestable market
44)
A key reason why regulators might approve a merger between competing companies is to encourage
(2pts)
vertical mergers
political campaign donations.
innovation.
price discrimination
tying contracts
45)
Of the different types of merger, the federal government looks at which one most carefully because of its potential for reducing competition?
(2pts)
vertical
diagonal
conglomerate
horizontal
staged
46)
Which of the following is a good example of a “network good”?
(2pts)
Electricity, because large economies of scale mean that the cost per kilowatt falls as more and more electricity is generated.
The telephone, because it becomes more useful as more and more people have telephones.
A television broadcast, because one person watching the show doesn’t prevent anyone else from watching the same show.
All the above.
None of the above.
47)
Which approach to regulating a natural monopoly tries to set the regulated price equal to the firm's marginal cost of production?
(2pts)
cost regulation
profit regulation
output regulation
price regulation
social justice regulation
48)
To implement the approach to regulating a natural monopoly known as “profit regulation,” regulators would require the firm to charge a price equal its
(2pts)
average fixed cost
marginal cost.
marginal revenue
average variable cost
average total cost
49)
OSHA, the CPSC, and the EPA are in the alphabet soup bowl of social regulatory agencies that are primarily concerned with which of the following?
(2pts)
mergers and acquisitions among firms in different industries
the profits being earned by oligopolies and monopolies
the conditions under which goods and services are produced and the safety of these item for the consumer
preventing firms from growing too large
the prices that firms charge for their products
50)
A key component of the economist's approach to looking at the effects of regulation is which of the following?
(2pts)
Costs and benefits are irrelevant to judging whether or not a regulation is a good one.
Regulations impose costs without yielding any benefits.
Regulations have unintended consequences that may cause results opposite to what was intended.
Regulations yield benefits without imposing any costs.
Explanation / Answer
40. (d) Sherman Act
The Sherman Antitrust Act is a landmark federal statute in the history of United States antitrust law (or "competition law") passed by Congress in 1890 under the presidency of Benjamin Harrison. It allowed certain business activities that federal government regulators deem to be competitive, and recommended the federal government to investigate and pursue trusts.
The law attempts to prevent the artificial raising of prices by restriction of trade or supply. "Innocent monopoly", or monopoly achieved solely by merit, is perfectly legal, but acts by a monopolist to artificially preserve that status, or nefarious dealings to create a monopoly, are not. The purpose of the Sherman Act is not to protect competitors from harm from legitimately successful businesses, nor to prevent businesses from gaining honest profits from consumers, but rather to preserve a competitive marketplace to protect consumers from abuses.
41. (d) sum of the squares of the market shares of each firm in the industry.
The Herfindahl-Hirschman Index (HHI) is a common measure of market concentration that is used to determine market competitiveness, often pre and post M&A transactions.
The Herfindahl-Hirschman index (HHI) is a commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in a market and then summing the resulting numbers. It can range from close to zero to 10,000. The U.S. Department of Justice uses the HHI for evaluating potential mergers issues.
42. (d) public interest theory.
The Public Interest Theory of regulation explains ingeneral terms, that regulation seeks the protection andbenefit of the public at large; public interest can be further described as the best possible allocation of scarce resources for individual and collective goods.
43. (b) lock-in
The Lock In Effect is a term, which is typically used to explain a practice, where a company makes it extremely hard for their customers to leave them, even if the customer wants to. A couple of lock in examples: UK banks are notorious for making it far more difficult to move to another bank, than it needs to be. Thus, The situation when a product or technology becomes the standard and is difficult or impossible to dislodge as the standard is called the Lock-in effect.
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