CHAPTER 21
Market Power and Global Corporations
167. A merger in which one corporation absorbs other corporations that were it direct
competitors is called
a. a conglomerate merger.
b. a horizontal merger
c. a vertical merger
d. a global merger
168. ABC corporation makes automobiles. XYZ corporation makes fabric used in the seat
rporation,
this would be
a. a conglomerate merger.
b. a horizontal merger
c. a vertical merger
d. a global merger
169. The first wage of mergers in the US in the beginning of the twentieth century consisted
mostly of
a. conglomerate mergers
b. horizontal mergers
c. vertical mergers
d. global mergers
170. The second wave of mergers in the US occurred during the 1920s and was characterized by
a. conglomerate mergers
b. horizontal mergers
c. vertical mergers
d. global mergers
171. The third wave of mergers in the US during the 1960s consisted mostly of
a. conglomerate mergers
b. horizontal mergers
c. vertical mergers
d. global mergers
172. One cause of the emergence of the giant corporation is economies of scale which means
a. total costs decline as output increases.
b. average or per unit costs decline as output increases.
c. profits decline as output increases.
d. inefficiency increases as firm size increases.
173. The debate over the impact of large firms with monopoly market power continues today.
What is the conservative position?
a. monopoly may be the best outcome, so there is no need for government regulation.
b. monopolies should not be broken up but should be regulated by the government.
c. monopolies should be taken over by the government and run to serve the public interest.
d. monopoly power will be reduced by the normal operation of market forces.
174.
a. a government regulatory agency becomes dominated by the industry it is assigned to
regulate and works in the interest of the industry rather than in the public interest.
b. a government official assigned to regulate an industry quits to go to work for a
corporation in that industry.
c. industry lobbyists write the laws that are used by the regulatory agency that is overseeing
that industry.
d. an industry hires government regulators on a part-time basis in an effort to influence
outcomes of public hearings.
175. In 2007, employees at the Federal Aviation Administration charged that the agency had
information that an airline was flying planes that had not been properly inspected but had
failed to act on this information and ground the planes. This circumstance is an example of
a. a revolving door.
b. insider trading
c. regulatory capture
d. retaliation
176.
a. its products are successful.
b. it can influence or manipulate prices or output in the market.
c. it can sell all it can product at existing market prices.
d. it has brand name recognition