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Home / Questions / Antitrust issues can be political firestorms. In order to accomplish their economic

Antitrust issues can be political firestorms. In order to accomplish their economic

   Antitrust issues can be political firestorms. In order to accomplish their economic
                            missions regarding monopolies, regulation, and antitrust policy without incurring the
                            scrutiny of the press and public, many presidents choose to

a. ignore the issue

b. adopt the rule of reason

c. adopt the per se rule

d. manipulate the budgets of enforcement agencies

e. promote policies outlined in the Clayton Act

22.              Suppose there are 100 firms of equal size currently sharing the market for peanut butter.
                            If 12 of these firms merge, how much will the Herfindahl-Hirschman Index change?

a. increase by 144

b. decrease by 144

c. increase by 132

d. decrease by 132

e. increase by 232

23.              Suppose there are two industries, A and B. Suppose that mergers are proposed in both
                            industries, and the Herfindahl-Hirschman Index would increase by 500 in each one. If
                            antitrust officials allow the mergers in industry A but challenge the mergers in industry
                            B, the most likely explanation is that

a. there are political motivations to antitrust enforcement

b. industry A was already less competitive than industry B

c. industry A had a balanced oligopoly and industry B did not

d. industry A started as a more competitive industry than B

e. antitrust authorities made a random decision

24.              The advantages that arise from economies of scale make entry difficult for new firms. As
                            a result, monopolies and oligopolies are often associated with __________ and
                            ___________.

a. b and e

b. low costs; high prices

c. low costs; low prices

d. antitrust; laissez-faire

e. competition; high prices

25.              Which of the following are options available to government when dealing with
                            monopolies?

a. b, c, and e

b. nationalization

c. marginal cost pricing regulation

d. marginal revenue pricing regulation

e. breaking up the firm

26.              Economies of scale create __________ for existing firms, which in turn creates
                            __________ for potential entrants.

a. b and e

b. problems; opportunities

c. savings; costs

d. losses; profits

e. advantages; disadvantages

27.              Which of the following is not an antitrust enforcement option?

a. c and e

b. nationalization

c. laissez-faire

d. break ups

e. regulation

28.              In a perfectly balanced oligopoly (with eight firms, all having the same market share), if
                            any one firm captures 1 percent of the market from one of the others,

a. c and d

b. the eight-firm concentration ratio will increase

c. the eight-firm concentration ratio will decrease

d. the Herfindahl-Hirschman index will rise

e. the Herfindahl-Hirschman index will fall

29.              When choosing between fair price and marginal cost regulation for a natural monopoly,
                            regulators must choose between

a. c and d

b. c and e

c. two different price and quantity combinations

d. efficiency and equity

e. possible cost drift and subsidization

30.              A laissez-faire policy may be an effective antitrust policy if markets are

a. c and d

b. d and e

c. oligopolistic

d. competitive

e. contestable

Dec 11 2019 View more View Less

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