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The act of Congress which prohibited "unfair or deceptive acts or practices in commerce" is called


A) the Federal Trade Commission Act of 1914.
B) the Clayton Act.
C) the Chain Store Act.
D) the Robinson-Patman Act.

E) C) and D)
F) A) and C)

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Offering two or more products for sale as a set is known as


A) bundling.
B) versioning.
C) monopolizing.
D) product sharing.

E) A) and C)
F) C) and D)

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The theory of regulatory behavior that predicts that the "regulators" eventually will become controlled by the "regulated" is called


A) the capture hypothesis.
B) the the share-the-gains, share-the-pains hypothesis.
C) the asymmetric information hypothesis.
D) the market failure hypothesis.

E) A) and B)
F) All of the above

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Under rate-of-return regulation, natural monopolies must use


A) marginal cost pricing.
B) average cost pricing.
C) efficient pricing.
D) monopoly pricing.

E) None of the above
F) A) and B)

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-What is the problem with marginal cost pricing in the natural monopoly situation? How do regulatory agencies in the United States usually handle the problem? -What is the problem with marginal cost pricing in the natural monopoly situation? How do regulatory agencies in the United States usually handle the problem?

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If the firm is a natural monopoly, then ...

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Commonwealth Edison is the only provider of electricity to many households in the Chicago area. Commonwealth Edison is regulated by the government. This type of regulation is known as


A) the Federal Register.
B) social regulation.
C) the market share test.
D) economic regulation.

E) A) and B)
F) None of the above

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According to U.S. antitrust enforcement guidelines, a merger is likely to be challenged if


A) the HHI decreases after the merger.
B) the industry after the merger has an HHI above 1,800 and the HHI rises by more than 50.
C) the industry after the merger has an HHI above 1,800 and the HHI falls by more than 100.
D) the industry after the merger has an HHI above 1,000 and the HHI rises by more than 10.

E) A) and B)
F) B) and C)

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Regulation imposed by such organizations as the Food and Drug Administration or the Environmental Protection Agency seeking to protect the welfare of people in our nation is referred to as


A) moral regulation.
B) natural regulation.
C) rate-of-return regulation.
D) social regulation.

E) None of the above
F) B) and D)

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The following table depicts the cost and demand structure a natural monopoly faces. Provided that the firm operates as a monopolist, what is the price charged and quantity produced in order to maximize profits? The following table depicts the cost and demand structure a natural monopoly faces. Provided that the firm operates as a monopolist, what is the price charged and quantity produced in order to maximize profits? A) price charged of $900 and quantity produced of 1 B) price charged of $800 and quantity produced of 2 C) price charged of $700 and quantity produced of 3 D) price charged of $600 and quantity produced of 4


A) price charged of $900 and quantity produced of 1
B) price charged of $800 and quantity produced of 2
C) price charged of $700 and quantity produced of 3
D) price charged of $600 and quantity produced of 4

E) A) and B)
F) None of the above

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One weakness of the Sherman Act is that


A) it fails to clearly define restraint of trade.
B) it applies only to foreign monopolies.
C) it applies only to the steel and railroad industries.
D) none of the above

E) A) and C)
F) C) and D)

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The type of mergers that the Federal Trade Commission will most likely challenge are


A) mergers of firms within a relevant market.
B) mergers of firms in different markets.
C) mergers of firms that will generate economies of scale.
D) mergers of firms in different geographical locations.

E) C) and D)
F) None of the above

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-Refer to the above figure. Suppose the government requires the natural monopolist to charge the efficient price. Then profits for the firm will be A) zero. B) losses equal to times distance f-g. C) losses equal to times distance d-e. D) profits equal to times distance a-b. -Refer to the above figure. Suppose the government requires the natural monopolist to charge the efficient price. Then profits for the firm will be


A) zero.
B) losses equal to -Refer to the above figure. Suppose the government requires the natural monopolist to charge the efficient price. Then profits for the firm will be A) zero. B) losses equal to times distance f-g. C) losses equal to times distance d-e. D) profits equal to times distance a-b. times distance f-g.
C) losses equal to -Refer to the above figure. Suppose the government requires the natural monopolist to charge the efficient price. Then profits for the firm will be A) zero. B) losses equal to times distance f-g. C) losses equal to times distance d-e. D) profits equal to times distance a-b. times distance d-e.
D) profits equal to -Refer to the above figure. Suppose the government requires the natural monopolist to charge the efficient price. Then profits for the firm will be A) zero. B) losses equal to times distance f-g. C) losses equal to times distance d-e. D) profits equal to times distance a-b. times distance a-b.

E) None of the above
F) All of the above

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-In the above figure, a regulation requiring average cost pricing would force the firm to produce at output level A) Q1. B) Q2. C) Q3. D) Q4. -In the above figure, a regulation requiring average cost pricing would force the firm to produce at output level


A) Q1.
B) Q2.
C) Q3.
D) Q4.

E) None of the above
F) All of the above

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The Securities and Exchange Commission and the Federal Aviation Administration are examples of agencies engaged in


A) the regulation of natural monopolies.
B) the regulation of nonmonopolistic industries.
C) social regulation.
D) health and safety regulation.

E) A) and B)
F) A) and C)

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The Sherman Antitrust Act was passed to


A) protect companies from foreign competition.
B) protect the monopoly profits of firms.
C) control the growth of monopolies in the U.S.
D) prevent market price from equaling marginal cost.

E) None of the above
F) B) and C)

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Which of the following defines monopoly?


A) Sherman Act
B) Clayton Act
C) Federal Trade Commission Act
D) none of the above

E) A) and D)
F) None of the above

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-Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________. A) ; B) ; C) ; D) ; -Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________.


A) -Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________. A) ; B) ; C) ; D) ; ; -Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________. A) ; B) ; C) ; D) ;
B) -Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________. A) ; B) ; C) ; D) ; ; -Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________. A) ; B) ; C) ; D) ;
C) -Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________. A) ; B) ; C) ; D) ; ; -Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________. A) ; B) ; C) ; D) ;
D) -Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________. A) ; B) ; C) ; D) ; ; -Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industry's output will be ________ and the product's price will be ________. A) ; B) ; C) ; D) ;

E) A) and D)
F) All of the above

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When production is characterized by persistently declining long-run average costs as output increases,


A) the costs of production are greater when competition exists than when a single firm produces a good.
B) it is impossible for two firms to compete in the market.
C) the costs are lower if a single firm exists, and even if the firm is unregulated, price will still be lower with a single firm.
D) there is no need for the government to limit competition by licensing requirements.

E) All of the above
F) A) and B)

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Which of the following is a government response to asymmetric information?


A) Product guarantees
B) External product certification
C) Manufacturer's warranties
D) Government licensing

E) All of the above
F) B) and C)

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-Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price A) and sell units. B) and sell units. C) and sell units. D) and sell units. -Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price


A) -Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price A) and sell units. B) and sell units. C) and sell units. D) and sell units. and sell -Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price A) and sell units. B) and sell units. C) and sell units. D) and sell units. units.
B) -Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price A) and sell units. B) and sell units. C) and sell units. D) and sell units. and sell -Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price A) and sell units. B) and sell units. C) and sell units. D) and sell units. units.
C) -Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price A) and sell units. B) and sell units. C) and sell units. D) and sell units. and sell -Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price A) and sell units. B) and sell units. C) and sell units. D) and sell units. units.
D) -Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price A) and sell units. B) and sell units. C) and sell units. D) and sell units. and sell -Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price A) and sell units. B) and sell units. C) and sell units. D) and sell units. units.

E) A) and B)
F) A) and C)

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