Ch 13 Antirust Regulation
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or
answers the question.
1) Productive efficiency means that
1) _______
A) firms are innovating to create new products.
B) products are produced on an assembly line.
C) there are many firms in the market.
D) resources are employed in a way that minimizes total cost.
E) price is equal to marginal cost.
2) If the government intervenes in markets because industry prices exceed
marginal cost and there are deadweight losses, the government is acting
to promote
A) allocative efficiency.
B) productive efficiency.
C) research and development.
D) innovation.
E) technological efficiency.
2) _______
SHORT ANSWER. Briefly explain your answer, providing a clearly labeled graph if it will
help clarify your explanation
3) What is the role of government in promoting economic
3) _____________
efficiency?
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or
answers the question.
4) The Clayton Act prohibits
4) _______
A) price discrimination that lessens competition.
B) mergers that lead to monopoly.
C) serving on the board of directors of competing firms.
D) tie-in sales.
E) All of the above are provisions of the Clayton Act.
5) A product tie-in is
A) products that are used to produce another product.
B) a requirement that the purchaser of one product buy another as
well.
C) a requirement that products be purchased at the same time.
D) products that are promoted together.
E) complementary products.
5) _______
6) Predatory pricing is
A) cheating on a cartel agreement.
B) engaging in a price war.
C) advertising to develop brand loyalty.
D) setting price below cost to drive a rival out of the industry.
E) setting low promotional prices.
6) _______
SHORT ANSWER. Briefly explain your answer, providing a clearly labeled graph if it will
help clarify your explanation
7) What are the major provisions of the Sherman Act?
7) _____________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or
answers the question.
8) A merger between two firms in the same industry or market is called a
8) _______
________ merger.
A) conglomerate
B) horizontal
C) parallel
D) vertical
E) longitudinal
9) If McDonalds restaurants were to purchase a cattle ranch, this would be
an example of a ________ merger.
A) longitudinal
B) vertical
C) parallel
D) conglomerate
E) horizontal
9) _______
10) A merger between two firms in unrelated industries is called a ________
merger.
A) vertical
B) parallel
C) conglomerate
D) longitudinal
E) horizontal
10) ______
11) At the present time, the government challenges mergers
A) only in the case of conglomerate mergers.
B) in price-fixing cases.
C) only if the HHI is very small.
D) in all cases.
E) only if they substantially lessen competition.
11) ______
12) The government is most likely to challenge a ________ merger.
A) parallel
B) vertical
C) longitudinal
D) horizontal
E) conglomerate
12) ______
13) If Nike, a producer of athletic shoes, were to purchase New Balance,
another producer of athletic shoes, this would be a ________ merger.
A) conglomerate
B) horizontal
C) vertical
D) longitudinal
E) parallel
13) ______
14) A firm that is vertically integrated
A) owns several firms in the same market.
14) ______
B)
C)
D)
E)
owns several unrelated companies.
controls only one step in the production process.
monopolizes more than one market.
controls more than one step in the production process.
15) Gas and electric companies are often regulated by
A) the Department of Justice.
B) public utility commissions.
C) the Federal Trade Commission.
D) the state government.
E) the court system.
15) ______
16) AT&T was considered to be a natural monopoly because
A) it was the first firm to enter the market.
B) setting up a telephone network requires a great deal of capital.
C) no other firm wanted to enter the telephone market.
D) there were health and safety issues involved in the provision of
phone service.
E) it is not possible to have more than one telephone company.
16) ______
1) D
2) A
3) Governments take actions to promote productive efficiency, innovation, and improve
allocative efficiency. (Student might also list specific actions.)
4) E
5) B
6) D
7) The Sherman Act has two sections. Section 1 makes it illegal to fix prices or restrict output.
Section 2 makes it illegal to monopolize or attempt to monopolize an industry.
8) B
9) B
10) C
11) E
12) D
13) B
14) E
15) B
16) B