1)A firm is more likely to have a natural monopoly when: Select one: a. the size

Question

1)A firm is more likely to have a natural monopoly when:

Select one: a. the size of the market is small relative to the efficient scale of the firm. b. the size of the market is large relative to the efficient scale of the firm. c. the firms face no or low fixed costs. d. the government grants the firm an exclusive license to operate. Incorrect

2)The Robinson-Patman Act of 1936:

Select one: a. prohibited selling products at "unreasonably low prices" with the intent of reducing competition. b. made it illegal to monopolize a market. c. repealed the Sherman Act. d. outlawed price discrimination for the purpose of reducing competition. Incorrect

3)The Sherman Act of 1890:

Select one: a. made it illegal to engage in practices that resulted in restraint of trade. b. outlawed tying contracts. Incorrect c. outlawed stock-purchase mergers that would substantially reduce competition. d. prohibited selling products at "unreasonably low prices" with the intent of reducing competition.

4)If a severe natural disaster reduced the population of a city, one would expect a natural monopoly to:

Select one: a. raise prices. b. split into two firms. c. increase sales. d. merge with a competitor. Incorrect

5)The result of the Interstate Bakeries and Continental Bakery case was that the firms were:

Select one: a. allowed to merge only if one of the firms sold off some of its divisions. b. blocked from merging because a merger would have created a monopoly in some locations. Incorrect c. fined substantial amounts for engaging in a trust. d. forced to split up into several smaller firms

6)Recall the Application about FTC information on predatory pricing to answer the following question(s).

Recall the Application. According to the FTC, a company pricing below its own cost:

Select one: a. is generally a violation of antitrust laws. Incorrect b. is generally not a violation of antitrust laws. c. is always a violation unless it is part of a strategy to eliminate foreign competition. d. is always a violation unless it is part of a strategy to create a monopoly so it can recoup its losses.

Explanation / Answer

1) b. the size of the market is large relative to the efficient scale of the firm.

2) d. outlawed price discrimination for the purpose of reducing competition.

3) c. outlawed stock-purchase mergers that would substantially reduce competition.

4) a. raise prices

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