21–61
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C.
“Behavioralists” believe that some monopolists are “good” monopolists.
D. “Structuralists” believe that some monopolists are “good” monopolists.
154.
One main difference in the rulings on the 1945 Alcoa case and the 1956 DuPont
cellophane case is that the Alcoa case
A.
focused on structure, whereas the DuPont case focused on behavior.
D.
defined the market narrowly, whereas the DuPont case defined the market broadly.
155.
Which of the following beliefs is not strongly espoused by the “active antitrust
perspective” in policy enforcement?
A.
Firms occasionally use illegal tactics to gain over competitors.
21–62
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written consent of McGraw-Hill Education.
Topic: Antitrust Policy: Issues and Impacts
156.
Which of the following beliefs is not strongly espoused by the “laissez-faire
perspective” in antitrust policy?
A. Competition among firms is a battle for dominance.
157.
The idea that competition is in some circumstances insufficient to achieve allocative
efficiency and ensure fairness to consumers and competing firms is most closely associated
with which antitrust perspective?
A.
laissez-faire
158.
Which of the following statements is true?
A. The active antitrust perspective believes that competitive market forces will
automatically and actively reduce a firm’s monopoly power in the long run.
21–63
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written consent of McGraw-Hill Education.
C.
The laissez-faire perspective views firms as players in a competitive game who will
sometimes violate the rules in order to gain a huge advantage over others.
D.
The laissez-faire perspective believes that an active enforcement of antitrust policy is the
only way to reduce the monopoly power of giant firms.
159.
In the 1982 AT&T antitrust case, the resolution was an out-of-court settlement
involving a
A.
change in the business practices of AT&T.
160.
In the 2000 decision on the Microsoft antitrust case, the eventual remedy involved a
D.
takeover of Microsoft by the government.
21–64
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written consent of McGraw-Hill Education.
Test Bank: II
Topic: Antitrust Policy: Issues and Impacts
161.
Conglomerate mergers are combinations of
A.
many small firms.
162.
A merger between one firm and another firm that is its supplier is known as a
A. horizontal merger.
163.
A merger between McDonald’s and Burger King would be an example of a
A. conglomerate merger.
21–65
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written consent of McGraw-Hill Education.
Blooms: Understand
D i f f i c u l t y : 02 Medium
Learning Objective: 21–02 Describe some of the key issues relating to the interpretation
and application of antitrust laws.
Test Bank: II
Topic: Antitrust Policy: Issues and Impacts
164.
If Tyson Corporation, a firm that raises and processes chickens, combined with
Kentucky Fried Chicken, the resulting merger would be an example of a
A.
horizontal merger.
165.
An example of a horizontal merger is one between an airline and
A. a chain of hotels.
166.
The merger of a firm in one industry with another firm in the same industry that sells
similar products is called a
A.
vertical merger.
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written consent of McGraw-Hill Education.
B.
secondary merger.
C.
horizontal merger.
D. conglomerate merger.
167.
A merger that is neither horizontal nor vertical is called a
A. tying merger.
168.
Which type of merger is most likely to be the focus of antitrust scrutiny and
enforcement?
A. conglomerate
21–67
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written consent of McGraw-Hill Education.
Topic: The Antitrust Laws
169.
Which of the following indexes is used in Federal merger guidelines?
A.
consumer price index
170.
The sum of the squared values of market shares of firms in an industry is referred to as
the
171.
The Herfindahl index measures the
A. size of the market share of the four largest firms in an industry.
21–68
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written consent of McGraw-Hill Education.
Blooms: Understand
D i f f i c u l t y : 02 Medium
Learning Objective: 21–02 Describe some of the key issues relating to the interpretation
and application of antitrust laws.
Test Bank: II
Topic: Antitrust Policy: Issues and Impacts
172.
An industry has a single firm and is found to have violated antitrust laws. The
government breaks it up into two firms that will share the market equally. The Herfindahl
index for
this industry would change from
A. 100 to 50.
173.
An industry has five firms, each with a market share of 20 percent. 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 seek 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 500.
174.
If the market is defined more narrowly to include only a more restricted range of
products, then the Herfindahl index will
D.
either increase or decrease.
175.
The argument that an industry that is highly concentrated will act like an
anticompetitive monopolist would support the case that the application of antitrust laws
should be based
on industry
A. mergers.
176.
In antitrust law, “price-fixing” refers to
A.
the government fixing the prices of products of antitrust violators.
21–70
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written consent of McGraw-Hill Education.
Blooms: Understand
D i f f i c u l t y : 02 Medium
Learning Objective: 21–02 Describe some of the key issues relating to the interpretation
and application of antitrust laws.
Test Bank: II
Topic: Antitrust Policy: Issues and Impacts
177.
In recent years, the strictest application of antitrust laws has been for
A. breaking up firms with monopoly power.
178.
Per se violations in antitrust law refer to
D.
antitrust cases that are pending resolution.
179.
Which of the following is a per se violation?
A. price discrimination
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written consent of McGraw-Hill Education.
D.
horizontal merger
180.
If there was a conspiracy to fix prices, but the conspiracy did not succeed, the
government can still take the conspiring firm to court for improper conduct. This situation
would be
an example of
A.
the rule of reason.
181.
Which business practice is rarely challenged by the government under antitrust laws?
A.
price-fixing
182.
The degree of strictness in the enforcement of antitrust laws often depends on
C.
use of the Herfindahl index.
D.
per se violations.
183.
Antitrust legislation in the United States in recent decades has
A.
been vigorously and consistently enforced.
184.
Most economists agree that, overall, U.S. antitrust policy has been most successful in
A.
promoting competition and efficiency.
21–73
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written consent of McGraw-Hill Education.
Learning Objective: 21–02 Describe some of the key issues relating to the interpretation
and application of antitrust laws.
Test Bank: II
Topic: Antitrust Policy: Issues and Impacts
185.
Which of the following has tended to reduce the importance of antitrust law, according
to some economists?
A.
industrial policy
186.
The situation where a single firm can supply the product to an entire market at a lower
unit cost than if the market were split among a number of competing firms, is called a
A.
dominant firm oligopoly.
187.
Generally speaking, if a firm faces decreasing average total costs of production
throughout its entire range of output, then
A.
more firms will enter the market.
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written consent of McGraw-Hill Education.
C.
the firm is a natural monopoly.
D. the firm is able to earn only a normal profit.
188.
If economies of scale in an industry are so extensive that a single firm could serve the
entire market at a lower cost than if the market was split between two or more firms, this
industry is called a(n)
A. conglomerate
189.
Which of the following is most likely to be a natural monopoly?
A.
aircraft manufacturing
21–75
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written consent of McGraw-Hill Education.
Topic: Industrial Regulation
190.
What is a major characteristic of a natural monopoly?
A.
The firm is a single seller of a resource.
191.
What is most likely to happen as the output of a natural monopoly increases over the
range of market demand?
A.
There is a small decrease in average total cost and then it increases as output increases.
192.
The two alternative ways of promoting better outcomes when a natural monopoly
exists are
D.
breaking and merging.
21–76
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written consent of McGraw-Hill Education.
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Remember
D i f f i c u l t y : 01 Easy
Learning Objective: 21–03 Identify and explain the economic principles and difficulties
relating to the setting of prices rates charged by so-called natural monopolies.
Test Bank: II
Topic: Industrial Regulation
193.
Industrial regulation generally applies in cases where
A.
society would benefit if a monopoly is prevented from evolving in a certain market.
194.
The principal objective of industrial regulation is to
A.
increase product safety.
195.
An example of a government organization involved primarily in public regulation or
industrial regulation of natural monopolies would be the
21–77
A.
Food and Drug Administration.
196.
Legislation designed to regulate natural monopolies would be based on which theory
of regulation?
A.
social
197.
The public interest theory of regulation stipulates that government regulation of a
natural monopoly is necessary in order to achieve all of the following, except
A.
preventing the natural monopoly from harming society through its monopoly pricing.