Question 1

Cab drivers operating from JFK Airport to the City of New York legally must charge a specific fare. This is an example of

Accepted Answer

Economic regulation refers to government regulation of business practices, particularly in the areas of pricing and services, to protect consumers and promote fair competition. The specific fare requirements for cab drivers operating from JFK Airport to the City of New York falls under the category of economic regulation.

Question 2

Which of the following protects people from incompetent or unscrupulous producers?

Accepted Answer

B

Question 3

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

Accepted Answer

Both the Securities and Exchange Commission and the Federal Aviation Administration are examples of agencies engaged in the regulation of nonmonopolistic industries. The SEC regulates the securities industry, which is a competitive industry with many firms, while the FAA regulates the airline industry, which is also competitive with many firms. Nonmonopolistic industries refer to industries that do not have a single dominant firm or a small number of firms that have significant market power.

Question 4

A difference between economic regulation and social regulation is that

Accepted Answer

Economic regulations tend to be industry-specific, such as setting price ceilings or floors on certain products, whereas social regulations are more general and can affect firms in any industry, such as regulations related to environmental protection or workplace safety. Options A, B, and D are incorrect as they do not reflect a fundamental difference between economic and social regulations.

Question 5

Which type of regulation applies to all firms in the economy, as opposed to only covering specific industries?

Accepted Answer

Social regulation applies to all firms in the economy and covers areas such as workplace safety, environmental protection, and consumer protection. Economic regulation, rate regulation, and statutory regulation are more specific types of regulation that do not apply to all firms in the economy.

Question 6

Which of the following federal agencies is engaged in social regulation?

Accepted Answer

Social regulation refers to government intervention in the structure or operation of societal institutions to promote certain social or ethical goals. The Equal Employment Opportunity Commission is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee based on their race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information. This falls within the realm of social regulation. The other agencies listed are involved in economic regulation, which is the government's attempt to maintain social welfare by controlling the behavior of business enterprises.

Question 7

The Federal Trade Commission (FTC)is a regulatory agency that is responsible for preventing firms from engaging in misleading advertising. This type of regulation is known as

Accepted Answer

Social regulation is a type of government regulation that aims to promote public welfare by regulating the activities of private companies. The FTC's responsibility for preventing firms from engaging in misleading advertising falls under social regulation.

Question 8

Which of the following federal agencies is engaged in economic regulation?

Accepted Answer

The Federal Motor Carrier Safety Administration is responsible for regulating the trucking industry in the United States, including setting safety standards for vehicles and drivers, enforcing compliance with these standards, and imposing penalties for violations. This agency is engaged in economic regulation because its actions can have a significant impact on the industry's profits and operations. The other agencies listed are focused more on health and safety regulation than economic regulation.

Question 9

The regulation of the prices charged by insurance companies is known as

Accepted Answer

The regulation of insurance prices is a form of economic regulation, which is designed to protect consumers and prevent companies from engaging in unfair practices such as price gouging or monopolistic behavior. Social regulation, on the other hand, includes rules and laws related to public safety, environmental protection, and consumer protection. The Federal Register is a daily publication of the federal government that includes proposed and finalized regulations, but it is not itself a form of regulation. The market share test is a legal standard used to determine whether a particular company holds too much market power and may be engaging in anticompetitive behavior.

Question 10

The goals of rate regulation have included the prevention of

Accepted Answer

Rate regulation aims to prevent companies from making monopoly profits, as this can lead to anti-competitive behavior and higher prices for consumers. However, it does not necessarily aim to enforce marginal or average cost pricing, or prevent oligopolistic pricing.

Question 11

One of the basic differences between social and economic regulations is that

Accepted Answer

Economic regulations are industry-specific and usually aim to achieve economic stability, fair competition, and consumer protection. Social regulations, on the other hand, are not industry-specific and aim to promote social welfare, environmental protection, and public health and safety. Social regulations apply to all firms in the economy and cover a wide range of areas.

Question 12

One key purpose of economic regulation is

Accepted Answer

Economic regulation aims to control the price that regulated enterprises are allowed to charge. This is done in order to prevent monopolies from charging excessive prices and exploiting consumers. It allows for fair competition and protects against market failure. Options A, B, and D are not the primary purposes of economic regulation.

Question 13

The two basic types of government regulation are

Accepted Answer

The two basic types of government regulation are social regulation, which aims to protect public health, safety, and the environment, and economic regulation, which aims to ensure fair competition and prevent monopolies. Industry regulation (choice B) is a subcategory of economic regulation and does not encompass social regulation. Regulation of natural monopolies and cartels (choice A) falls under economic regulation. Labor law (choice C) is a separate category of regulation that focuses solely on the rights and protection of workers.

Question 14

The Food and Drug Administration (FDA)is an agency that would enforce

Accepted Answer

The FDA is responsible for enforcing social regulation policies related to food and drug safety. They ensure that products are safe for consumption and labeled accurately, among other things. Economic regulation policies are enforced by agencies such as the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC), while antitrust laws are enforced by the Department of Justice and the FTC. Price discrimination refers to discriminatory pricing practices and is not a regulatory issue enforced by the FDA.

Question 15

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

Accepted Answer

Economic regulation refers to the government's regulation of certain industries, such as utilities, to ensure that they are operating in the public interest and not taking advantage of their monopoly power. In this case, Commonwealth Edison has a monopoly as the sole provider of electricity to many households in the Chicago area, and is regulated by the government through economic regulation.

Question 16

Which of the following federal agencies is NOT engaged in economic regulation?

Accepted Answer

The Food and Drug Administration is primarily responsible for regulating the safety and efficacy of food, drugs, medical devices, and other consumer products, rather than economic regulation. The other three agencies listed have significant roles in regulating economic activity in the United States. The Federal Reserve plays a central role in monetary policy, regulating interest rates, and overseeing banks. The Federal Aviation Administration regulates air travel and transportation, including safety standards and operational rules. The Federal Deposit Insurance Corporation regulates banks and other financial institutions, providing insurance and ensuring their stability.

Question 17

U.S. government regulation of social and economic activity

Accepted Answer

Government regulation of social and economic activity has increased steadily since 1970, particularly in areas such as environmental protection, consumer safety, and workplace regulations.

Question 18

According to OSHA standards, the air in the building that John works in is unsafe. The type of regulation that OSHA engages in is known as

Accepted Answer

OSHA engages in social regulation, which focuses on protecting public health, safety, and the environment. The regulation of workplace safety falls under this category. The Federal Register is a publication where federal agencies announce proposed and final regulations, but it is not a type of regulation itself. The market share test and economic regulation do not apply to OSHA's regulation of workplace safety.

Question 19

The purpose of social regulation is

Accepted Answer

The purpose of social regulation is to focus on the impact of production on the environment and society, the working conditions under which goods and services are produced, and sometimes the physical attributes of goods. This regulation is not concerned with controlling prices or forcing a firm to produce at a certain point. The control of quality of service provided is typically associated with economic regulation.

Question 20

Which of the following federal agencies is NOT engaged in social regulation?

Accepted Answer

The Federal Deposit Insurance Corporation (FDIC) is primarily engaged in ensuring the stability and safety of the banking and financial system, rather than regulating social aspects such as the environment, consumer protection, or public health.

Quiz 27: Regulation and Antitrust Policy in a Globalized Economy