Multiple Choice Identiy the choice that best comypletes the statement or answers
ID: 1165638 • Letter: M
Question
Multiple Choice Identiy the choice that best comypletes the statement or answers the question 1. Which of the following is true of Antitrust policy a. Antitust policy prohibits agreements that allow free trade b. Antitrust policy restricts abusive behavior by a firm dominating a market e. Antitrust policy allows anti-competitive practices. d. Antitrust policy encourages establishment of monopoly firms e. Antitrust policy creates trade barriers like tariffs and quota 2. Which of the following are the three laws that define the U.S government's approach to antitrust? The Springfield, Clayton, and Trade Commission Acts The Sherman, Clayton, and Federal Trade Commission Acts The Sherman, Jackson, and Regional Trade Commissions Acts The Jackson, Charleston and Sherman Monopoly Restrictive Trade Acts b. · d. e. 3. The antitrust laws in the United States were created in the late 1800s as a result of: the emergence of large and dominant businesses in railroads, steel, oil, mining and finance the government decision to take responsibility for the improvement of trade deficit. the first illegal cartel, created in late 1800s. a. b. c. d a steep decline in prices of primary goods in the United States e. the United States being threatened by an external aggression. 4. A market is said to be concentrated when: a. b. c. d. e. the degree of competition in the market increases. many firms supply to a small number of consumers. the firms producing identical goods are clustered in a particular location. a firm or a few firms are able to dictate the competitive conditions in a market. there is a huge immigration of workers from neighboring areas. 5. The most reliable measure of market concentration is: a. the Cost of Living index. b. the Herfindahl index. c. the Market index d. the Market-Value weighted index. e. the Wholesale Price index The judicial doctrine, being a monopoly or attempting to monopolize is not in itself illegal; to be illegal, an action had to be shown to have negative economic effects, is called a. the "big is bad" policy. b. the per se rule. c. predatory price-cutting policy d. the rule of law. e. the rule of reason. 6.Explanation / Answer
Answer 1: Right option is b) Antitrust policy restricts abusive behavior by a firm dominating a market.
Explaination: Antitrust refers to government policy to regulate or break up monopolies in order to promote free competition and attain the benefits that such competition can provide to the economy and to society as a whole.
Answer 2 Right option is C) The Sherman, Clayton, and Federal Trade Commision acts
Explaination: Congress passed the first antitrust law, the Sherman Act, in 1890 as a "comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade." In 1914, Congress passed two additional antitrust laws: the Federal Trade Commission Act, which created the FTC, and the Clayton Act. With some revisions, these are the three core federal antitrust laws still in effect today.
Answer 3 Right option is a) the emergence of large and dominant businesses in railroads, steel, oil, mining and finace.
Explaination: Large manufacturing conglomerates emerged in great numbers in the 1880s and 1890s, and were perceived to have excessive economic power. As pointed by Hon. John Sherman, of Ohio, in his speech delivered in the Senate of the United States, Friday, March 21, 1890: "[The trusts are] a kingly prerogative, inconsistent with our form of government, and should be subject to the strong resistance of the State and national authorities."
Answer 4: Right option is d) a firm or a few firms are able to dictate the competitive conditions in a market.
Explaination: In economics, market concentration is a function of the number of firms and their respective shares of the total production in the market. Market concentration increases with decrease in number of firms operating in the market. As one or few firms hold the majority of share in total production of the market.
Answer 5: Right option is b) the Herfindahl Index
Explaination: The Herfindahl index (also known as 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.
Answer 6: Right option is e) the rule of reason
Expaination: The Rule of reason is a judicial doctrine of antitrust law which says a trade practice violates the Sherman Act only if the practice is an unreasonable restraint of trade, based on economic factors.
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