Question 1

This table contains data on the social costs and benefits incurred in improving water quality in a lake.Complete the table and answer the question(s)below.
Table 9.1-Costs of reducing water pollution 
-In Table 9.1,what is the marginal social cost (in dollars per PPM)of reducing pollution rates from 35 to 25 PPM?

Accepted Answer

The answer of This table contains data on the social...

Question 2

This table contains data on the social costs and benefits incurred in improving water quality in a lake.Complete the table and answer the question(s)below.
Table 9.1-Costs of reducing water pollution 
-In Table 9.1,what is the marginal social cost (in dollars per PPM)of reducing pollution rates from 25 to 10 PPM?

Accepted Answer

The answer of This table contains data on the social...

Question 3

Which of the following is not an income transfer?

Accepted Answer

Food stamps are not considered an income transfer because they are a form of in-kind benefit, which means that they provide eligible individuals with a specific type of good or service (food) instead of cash. The other options listed (unemployment benefits, Social Security payments, and welfare) are all examples of income transfers because they provide individuals with cash assistance.

Question 4

Which of the following is not a goal of macro intervention?

Accepted Answer

Market power is not a goal of macro intervention. The other options, price stability, full employment, and economic growth are commonly cited goals of macroeconomic policies.

Question 5

All of the following are macro failures that justify government intervention except for:

Accepted Answer

Inequitable distribution of output is considered a microeconomic issue related to fairness and equity, rather than a macroeconomic failure that typically justifies government intervention.

Question 6

The federal government's role in providing aid to the poor and the aged is justified because of concerns about:

Accepted Answer

Concerns about inequity justify the federal government's role in providing aid to the poor and the aged, as it aims to address disparities in wealth and access to resources.

Question 7

The federal government's role in antitrust enforcement is justified by considerations of:

Accepted Answer

The federal government's role in antitrust enforcement is primarily justified by concerns related to market power, where individual firms or a group of firms control a significant portion of the market to the detriment of competition and consumers. This can lead to higher prices, reduced innovation, and less choice for consumers. Antitrust laws aim to prevent monopolies and promote competition to ensure a healthy market environment.

Question 8

By breaking up AT&T the Justice Department expected that the telecommunications market would change from:

Accepted Answer

The Justice Department expected that breaking up AT&T would change the telecommunications market from a monopoly toward a competitive market. This was because AT&T dominated the market before the breakup, holding a virtual monopoly on telephone service. By breaking up the company into smaller parts, other companies were able to enter the market and compete with AT&T, leading to greater competition and lower prices for consumers.

Question 9

When the economy experiences high unemployment,there is:

Accepted Answer

High unemployment indicates a macroeconomic failure, as it reflects a broader health of the economy, rather than issues specific to individual firms or markets (microeconomic failures). This may be due to systemic issues such as inadequate growth, insufficient investment, or structural imbalances. While government policies and actions can play a role in addressing or exacerbating the issue, the root cause is typically beyond the control of any one actor or institution.

Question 10

The first antitrust act to prohibit "conspiracies in restraint of trade" was:

Accepted Answer

The Sherman Act, passed in 1890, was the first federal antitrust law to prohibit "conspiracies in restraint of trade" and monopolies in commerce. It remains one of the primary laws used to prevent anti-competitive behavior in the United States. The Clayton Act, passed in 1914, provided additional measures to prevent anti-competitive mergers and acquisitions. The Federal Trade Commission Act, passed in 1914, created the Federal Trade Commission to enforce antitrust laws and investigate unfair business practices. Case decisions such as those for AT&T and Microsoft are examples of how these laws are applied in specific cases, but they are not themselves antitrust acts.

Question 11

After the government filed its antitrust case,Microsoft:

Accepted Answer

After the government filed its antitrust case, Microsoft changed some of its exclusionary licensing practices. This was a result of the settlement agreement reached between Microsoft and the government, which required Microsoft to change some of its business practices to increase competition in the software industry. However, it is important to note that this does not mean Microsoft stopped using its market power to compete aggressively.

Question 12

Which of the following created an agency to identify anticompetitive practices?

Accepted Answer

The Federal Trade Commission Act created the Federal Trade Commission (FTC) in 1914, which is tasked with identifying and prohibiting anticompetitive practices in the marketplace. The Sherman Act (1890) and the Clayton Act (1914) are antitrust laws that provide legal authority for the FTC to pursue antitrust cases, but they did not create the agency itself. The Federal Reserve Act (1913) established the Federal Reserve System to oversee the nation's monetary policy and banking system, but it does not address antitrust issues.

Question 13

Which of the following prohibits price discrimination?

Accepted Answer

The Clayton Act specifically prohibits price discrimination that lessens competition. The Sherman Act and Federal Trade Commission Act address antitrust violations in general, but do not specifically mention price discrimination. The Full Employment and Balanced Growth Act is focused on economic growth and employment, and does not address price discrimination at all.

Question 14

Government antitrust activity led to the breakup of AT&T in the 1980s because,among other things,it felt that AT&T had too much control over the telecommunications market.What type of market failure was most likely involved?

Accepted Answer

The breakup of AT&T suggests that the company had significant market power, which is a type of market failure. Market power occurs when a single firm or a small group of firms have the ability to control market prices and output levels, leading to reduced competition and potential harm to consumers. In this case, AT&T was deemed to have too much control over the telecommunications market, which led to antitrust action to break it up into smaller, more competitive companies.

Question 15

According to the text,what type of market failure provided the justification for the antitrust case against Microsoft?

Accepted Answer

The antitrust case against Microsoft was based on market power, specifically the misuse of monopoly power in the operating system market to stifle competition in other software markets. This type of market failure can limit consumer choice and may result in higher prices and reduced innovation.

Question 16

This table contains data on the social costs and benefits incurred in improving water quality in a lake.Complete the table and answer the question(s)below.
Table 9.1-Costs of reducing water pollution 
-In Table 9.1,what is the marginal social benefit (in dollars per PPM)of reducing pollution rates from 25 to 10 PPM?

Accepted Answer

The answer of This table contains data on the social...

Question 17

Government intervention in the economy:

Accepted Answer

Government intervention in the economy can fix market failures such as externalities and public goods. However, it can also lead to unintended consequences and create inefficiencies in the market, ultimately making the economy worse off. Therefore, the correct choice is D - government intervention may fix market failures or make the economy worse off.

Question 18

According to the public confidence survey presented in the text,the public:

Accepted Answer

The survey indicates that the public has substantial doubts about the government's ability to correct market failures, suggesting a lack of confidence in government intervention.

Question 19

This table contains data on the social costs and benefits incurred in improving water quality in a lake.Complete the table and answer the question(s)below.
Table 9.1-Costs of reducing water pollution 
-In Table 9.1,what is the marginal social benefit (in dollars per PPM)of reducing pollution rates from 35 to 25 PPM?

Accepted Answer

The answer of This table contains data on the social...

Question 20

This table contains data on the social costs and benefits incurred in improving water quality in a lake.Complete the table and answer the question(s)below.
Table 9.1-Costs of reducing water pollution 
-In Table 9.1,what is the marginal social benefit (in dollars per PPM)of reducing pollution rates from 10 to 0 PPM?

Accepted Answer

The answer of This table contains data on the social...

Quiz 9: Government Intervention

Which of the following is not an income transfer?

Which of the following is not a goal of macro intervention?

All of the following are macro failures that justify government intervention except for:

The federal government's role in providing aid to the poor and the aged is justified because of concerns about:

The federal government's role in antitrust enforcement is justified by considerations of:

By breaking up AT&T the Justice Department expected that the telecommunications market would change from:

When the economy experiences high unemployment,there is:

The first antitrust act to prohibit "conspiracies in restraint of trade" was:

After the government filed its antitrust case,Microsoft:

Which of the following created an agency to identify anticompetitive practices?

Which of the following prohibits price discrimination?

Government antitrust activity led to the breakup of AT&T in the 1980s because,among other things,it felt that AT&T had too much control over the telecommunications market.What type of market failure was most likely involved?

According to the text,what type of market failure provided the justification for the antitrust case against Microsoft?

Government intervention in the economy:

According to the public confidence survey presented in the text,the public: