Question 1

The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will

Accepted Answer

The fundamental belief in a market-oriented economy like that of the US is that firms are best positioned to make decisions that attract more customers (B) and enhance their production efficiency (C). This belief is rooted in the idea that businesses, driven by the profit motive, will innovate and adjust their operations to meet consumer demands and optimize their production processes.

Question 2

Government passed the _______ to limit the power of large, consolidated firms that were run by trustees as if they were a single firm.

Accepted Answer

The answer of Government passed the _______ to limit the...

Question 3

The main challenge for antitrust regulators is

Accepted Answer

The main challenge for antitrust regulators is to ensure that mergers and business practices do not hinder competition, which could lead to higher prices, lower quality, or less innovation for consumers.

Question 4

Which of the following has the power to allow a merger, prohibit it, or allow it if certain conditions are met?

Accepted Answer

The answer of Which of the following has the power...

Question 5

In the U.S., about _______ of all reported merger and acquisition transactions in 2008 exceeded $500 million, while about _______ exceeded $1 billion.

Accepted Answer

In 2008, a smaller portion of all reported merger and acquisition transactions in the U.S. exceeded these high-value thresholds, with only 25% exceeding $500 million and 10% exceeding $1 billion. This reflects the distribution of transaction sizes, where most deals were under these amounts.

Question 6

Which of the following government institutions bears the responsibility of enforcing US antitrust laws?

Accepted Answer

The answer of Which of the following government institutions bears...

Question 7

A merger will likely lessen competition if

Accepted Answer

Mergers that enable the new single firm to raise prices typically do so by reducing competition, as the firm gains more market power.

Question 8

A government sanctioned merger between two companies can sometimes lead to a clash _______
That makes both firms worse off.

Accepted Answer

The correct answer is C) because when two companies merge, differences in corporate culture, management styles, and business practices can lead to conflicts, known as a clash of corporate personalities, which can negatively impact the merged entity's performance.

Question 9

Which of the following is a true statement?

Accepted Answer

The government approves most proposed mergers because they often see them as beneficial for the economy or competitive landscape, or they find that the mergers do not significantly harm competition. However, this does not mean that all mergers are approved without scrutiny or conditions.

Question 10

Which of the following typically leads to two formerly separate firms being under common ownership?

Accepted Answer

Mergers and acquisitions both involve combining two companies into one entity, leading to common ownership.

Question 11

Which of the following has become a common condition for allowing a merger of large firms?

Accepted Answer

Commitments to sell off certain parts of the firms are often required by regulatory authorities to prevent monopolistic practices and ensure competition remains fair in the market. This can alleviate concerns about reduced competition or market dominance resulting from the merger.

Question 12

Antitrust regulations would most likely require one of the following in order to determine whether or not a merger may enhance competition. Which one is it?

Accepted Answer

Antitrust regulations often require an analysis using numerical tools to assess the potential impact of a merger on competition, such as market concentration indices and economic models.

Question 13

If the two smallest firms in a competitive market merged, the four-firm concentration ratio _______
Because _______.

Accepted Answer

The four-firm concentration ratio would not change because the merger involves the two smallest firms, which are unlikely to significantly alter the market share held by the four largest firms, thus not notably diminishing the degree of competition.

Question 14

Why would regulators find that a proposed merger is likely to lessen competition?

Accepted Answer

A proposed merger might be found to lessen competition if it leads to lower quality products. This is because with less competition, companies have less incentive to maintain high quality to attract or keep customers.

Question 15

In the closing decades of the nineteenth century, many industries in the U.S. economy were dominated by a single firm that had most of the sales for the entire country. In many cases these large firms were _______.

Accepted Answer

In the late 19th century, many dominant firms in the U.S. economy were organized as trusts, a form of business organization where a group of corporations would be managed by a single board of trustees, effectively reducing competition and controlling prices within an industry.

Question 16

If the largest four firms in an industry control less than half the market, their competitive concentration ratio

Accepted Answer

The competitive concentration ratio measures the market share controlled by the largest firms in an industry. If the largest four firms control less than half the market, their concentration ratio is not particularly high, indicating a more competitive industry landscape.

Question 17

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers?

Accepted Answer

Merged firms often have less competition, which can allow them to increase prices and maintain higher profits due to reduced pressure to keep prices low. This can be detrimental to consumers.

Question 18

What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair?

Accepted Answer

The Federal Trade Commission (FTC) was established in 1914 to prevent unfair methods of competition in commerce as part of the battle to "bust the trusts."

Question 19

Antitrust laws were created to give government the power to

Accepted Answer

The answer of Antitrust laws were created to give government...

Question 20

The US Federal Trade Commission justifies their record of approval of most mergers by asserting that, even though competition is diminished by consolidating two firms into one, mergers actually benefit

Accepted Answer

Mergers can lead to increased efficiency by allowing firms to reduce costs, improve production processes, or innovate, which can benefit competition and consumers by potentially lowering prices, improving quality, or offering new products.

Quiz 11: Monopoly and Antitrust Policy

The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will

Government passed the _______ to limit the power of large, consolidated firms that were run by trustees as if they were a single firm.

The main challenge for antitrust regulators is

Which of the following has the power to allow a merger, prohibit it, or allow it if certain conditions are met?

In the U.S., about _ of all reported merger and acquisition transactions in 2008 exceeded $500 million, while about _ exceeded $1 billion.

Which of the following government institutions bears the responsibility of enforcing US antitrust laws?

A merger will likely lessen competition if

A government sanctioned merger between two companies can sometimes lead to a clash _______ That makes both firms worse off.

Which of the following is a true statement?

Which of the following typically leads to two formerly separate firms being under common ownership?

Which of the following has become a common condition for allowing a merger of large firms?

Antitrust regulations would most likely require one of the following in order to determine whether or not a merger may enhance competition. Which one is it?

If the two smallest firms in a competitive market merged, the four-firm concentration ratio _ Because _.

Why would regulators find that a proposed merger is likely to lessen competition?

In the closing decades of the nineteenth century, many industries in the U.S. economy were dominated by a single firm that had most of the sales for the entire country. In many cases these large firms were _______.

If the largest four firms in an industry control less than half the market, their competitive concentration ratio

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers?

What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair?

Antitrust laws were created to give government the power to

The US Federal Trade Commission justifies their record of approval of most mergers by asserting that, even though competition is diminished by consolidating two firms into one, mergers actually benefit

Quiz 11: Monopoly and Antitrust Policy

The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will

Government passed the _______ to limit the power of large, consolidated firms that were run by trustees as if they were a single firm.

The main challenge for antitrust regulators is

Which of the following has the power to allow a merger, prohibit it, or allow it if certain conditions are met?

In the U.S., about _______ of all reported merger and acquisition transactions in 2008 exceeded $500 million, while about _______ exceeded $1 billion.

Which of the following government institutions bears the responsibility of enforcing US antitrust laws?

A merger will likely lessen competition if

A government sanctioned merger between two companies can sometimes lead to a clash _______ That makes both firms worse off.

Which of the following is a true statement?

Which of the following typically leads to two formerly separate firms being under common ownership?

Which of the following has become a common condition for allowing a merger of large firms?

Antitrust regulations would most likely require one of the following in order to determine whether or not a merger may enhance competition. Which one is it?

If the two smallest firms in a competitive market merged, the four-firm concentration ratio _______ Because _______.

Why would regulators find that a proposed merger is likely to lessen competition?

In the closing decades of the nineteenth century, many industries in the U.S. economy were dominated by a single firm that had most of the sales for the entire country. In many cases these large firms were _______.

If the largest four firms in an industry control less than half the market, their competitive concentration ratio

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers?

What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair?

Antitrust laws were created to give government the power to

The US Federal Trade Commission justifies their record of approval of most mergers by asserting that, even though competition is diminished by consolidating two firms into one, mergers actually benefit

In the U.S., about _ of all reported merger and acquisition transactions in 2008 exceeded $500 million, while about _ exceeded $1 billion.

If the two smallest firms in a competitive market merged, the four-firm concentration ratio _ Because _.