Chapter 32

1.	"Industrial concentration" in this chapter refers to which one of the following? A. firms that are absolutely large B. firms that are relatively large C. firms that are either absolutely or relatively large D. firms that are both absolutely and relatively large

2.	Which is part of the case against industrial concentration? Industrial concentration A. leads to income equality B. results in lower per unit costs C. is greater than it needs to be to achieve economies of scale D. produces economic profits that are used for research and technological development

3.	An essential part of the defense of industrial concentration is that the power of large businesses is decreased by A. the misallocation of resources B. inferior product development C. a rising standard of living D. interindustry competition

4.	Which law stated that contracts and conspiracies in restraint of trade, monopolies, attempts to monopolize, and conspiracies to monopolize are illegal? A. Sherman Act B. Clayton Act C. Federal Trade Commission Act D. Wheeler-Lea Act

5.	Which act specifically outlawed tying contracts and interlocking directorates? A. Sherman Act B. Clayton Act C. Federal Trade Commission Act D. Wheeler-Lea Act

6.	Which act has given the Federal Trade Commission the task of preventing false and misleading advertising and the misrepresentation of products? A. Sherman Act B. Clayton Act C. Federal Trade Commission Act D. Wheeler-Lea Act

7.	Which act banned the acquisition of a firm's assets by a competing firm when the acquisition would tend to reduce competition? A. Celler-Kefauver Act B. Wheeler-Lea Act C. Clayton Act D. Federal Trade Commission Act

8.	The argument that an industry which is highly concentrated will behave like a monopolist and the Alcoa court case of 1945 suggest that the application of antitrust laws should be based on industry A. behavior B. structure C. efficiency D. rule of reason

9.	The merger of a firm in one industry with a firm in an unrelated industry is called a A. horizontal merger B. vertical merger C. secondary merger D. conglomerate merger

10.	Toward which of the following has the application of the antitrust laws been the strictest in recent years? A. existing market structures B. conglomerate mergers C. mergers in which one of the firms is on the verge of bankruptcy D. price fixing

11.

An industry has four firms, each with a market share of 25%. There is no foreign competition, entry into the industry is difficult, and no firm is on the verge of bankruptcy. If two of the firms in the industry sought to merge, this action would most likely be opposed by the government because the Herfindahl index for the industry is A. 2,000 and the merger would increase the index by 1,000 B. 2,500 and the merger would increase the index by 1,000 C. 2,500 and the merger would increase the index by 1,250 D. 3,000 and the merger would increase the index by 1,250

12.	When the government or other party making the charge can show that there was a conspiracy to fix prices, even if the conspiracy did not succeed, this would be an example of A. a tying contract B. a per se violation C. the rule of reason D. the legal cartel theory

13.	Antitrust laws have been most effective in A. breaking up monopolies B. prosecuting price fixing in business C. expanding industrial concentration D. blocking entry of foreign competition in domestic markets

14.	An example of industrial or public regulation would be the A. Federal Communications Commission B. Food and Drug Administration C. Occupational Safety and Health Administration D. Environmental Protection Agency

15.	Legislation designed to regulate natural monopolies would be based on which theory of regulation? A. cartel B. public interest C. X-inefficiency D. public ownership

16.

Those who oppose the regulation of industry by regulatory agencies contend that A. many of the regulated industries are natural monopolies B. the regulatory agencies may favor industry because they are often staffed by former industry executives C. regulation contributes to an increase in the number of mergers in industries D. regulation helps moderate costs and improves efficiency in the production of a good or service produced by the regulated industry

17.

The legal cartel theory of regulation A. would allow the forces of demand and supply to determine the rate (prices) of the good or service B. would attempt to protect the public from abuses of monopoly power C. assumes that the regulated industry wishes to be regulated D. assumes that both the demand for and supply of the good or service produced by the regulated industry are perfectly inelastic

18.

Critics of the deregulation of industry argued that (among other things) deregulation would lead to A. lower prices for the products produced by the industry B. more competition in the industry C. a decline in the quantity of the product produced by the industry D. an increase in bureaucratic inefficiencies in that industry

19.	The overall effect of deregulation in U.S. industry over the past decades has resulted in A. higher prices, higher costs, and decreased output B. higher prices and costs, but increased output C. lower prices and costs, but decreased output D. lower prices, lower costs, and increased output

20.	Which is a concern of social regulation? A. the prices charged for goods B. the service provided to the public C. the conditions under which goods are manufactured D. the impact on business profits from the production of goods

21.	Those costs businesses and state and local government incur in meeting the requirement of regulatory commissions are referred to as A. administrative costs B. compliance costs C. containment costs D. per unit costs

22.	Which is engaged in social regulation? A. the Federal Trade Commission B. the Interstate Commerce Commission C. the Environmental Protection Agency D. the Federal Energy Regulatory Commission

23.	Which is a major criticism leveled against social regulation by its opponents? A. It is procompetitive. B. It will decrease the rate of innovation in the economy. C. It will increase the amount of price fixing among businesses. D. It will require too long a time for it to achieve its objectives.

24.

Supporters of social regulation contend that A. there is a pressing need to reduce the number of mergers in U.S. business B. the presence of natural monopoly requires strong regulatory action by government C. the social benefits will over time exceed the social costs D. administrative and compliance costs are often exaggerated

25.	Opponents of industrial policy contend that it A. reduces the private risk of exploring and applying new technology B. enhances economic efficiency in the economy C. encourages government support of declining industries D. fosters the development of complementary products and industries

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