Question 1

Antitrust laws may

Accepted Answer

Antitrust laws are implemented to restrict the ability of firms to merge if the merging firms would create a significant concentration of market power, which could potentially harm competition and consumers. Antitrust laws are designed to promote competition and prevent monopolies or oligopolies from forming, as these market structures can lead to higher prices, reduced output, and a lack of innovation. Restricting the ability of firms to merge is a way to ensure that competition remains strong and that firms cannot dominate the market to the detriment of consumers.

Question 2

Which of the following statements comparing monopoly with competition is correct?

Accepted Answer

The answer of Which of the following statements comparing monopoly...

Question 3

The collection of statutes aimed at curbing monopoly power is called

Accepted Answer

The collection of statutes aimed at curbing monopoly power is commonly referred to as antitrust law. The Clayton Act and the Sherman Act are both specific laws within antitrust law that target anticompetitive behavior and monopolies. The 14th amendment, while related to issues of equal protection under the law, is not specifically focused on antitrust regulation.

Question 4

Which of the following may eliminate some or all of the inefficiency that results from monopoly pricing?

Accepted Answer

The answer of Which of the following may eliminate some...

Question 5

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" is called the

Accepted Answer

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" is called the Sherman Antitrust Act. The act was named after its sponsor, Senator John Sherman of Ohio. The act made it illegal to form a trust that interfered with free trade between states or with other countries. It also made it illegal to monopolize or attempt to monopolize any part of trade or commerce. The act paved the way for further antitrust legislation, including the Clayton Antitrust Act of 1914.

Question 6

Which of the following is an example of price discrimination?

Accepted Answer

All three options listed involve price discrimination. Cents-off coupons offered by Nabisco are an example of third-degree price discrimination, as the company is offering discounts to individuals based on their willingness to pay. Amtrak's lower rates for weekend travel are another example of third-degree price discrimination, as they are targeting a specific market segment (weekend travelers) with a lower price. Hotel rates for AAA members are an example of second-degree price discrimination, as they are basing price on the quantity of rooms booked.

Question 7

The first major piece of antitrust legislation was the

Accepted Answer

The Sherman Antitrust Act of 1890 was the first major piece of antitrust legislation in the United States. It was designed to prevent the formation of monopolies and promote fair competition in the marketplace. The act prohibits certain business activities that federal government regulators deem to be anti-competitive, and provides for fines and imprisonment for violators.

Question 8

Which of the following statements is correct?

Accepted Answer

Antitrust laws aim to promote competition in the market, but they can also potentially harm social welfare if they prevent mergers that would lead to more efficient joint production and lower costs. Therefore, the statement in option D is correct. Option A is incorrect because there is no Stigler Antitrust Act, and the primary antitrust legislation in the US includes the Sherman Antitrust Act, the Clayton Antitrust Act, and the Federal Trade Commission Act. Option B is incorrect because antitrust laws do not automatically prevent mergers, but instead evaluate them based on their potential impact on competition. Option C is incorrect because antitrust laws actually expand the government's power to regulate private companies in order to promote competition and protect consumers.

Question 9

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits is called the

Accepted Answer

The Clayton Act was passed by Congress in 1914 and is designed to strengthen the government's powers to prevent anti-competitive practices and authorize private lawsuits. The Morgan Act (also known as the National Bank Consolidation and Trust Act) was passed in 1918 and amended the Clayton Act. The Sherman Act, passed in 1890, prohibits any activities that restrain trade or monopolize commerce. The 14th Amendment, passed in 1868, deals with citizenship, equal protection, and due process under the law.

Question 10

During the holiday season,high-end retailers frequently place a high price on merchandise on weekends and discount the price during the week.They do this because they believe that two groups of customers exist: shoppers with little free time and bargain hunters.Bargain hunters have time to shop around and frequently shop during the week.What do economists call this price strategy used by high-end retailers?

Accepted Answer

This price strategy is known as price discrimination, where retailers charge different prices for the same product to different groups of customers based on their willingness to pay. High-end retailers believe that shoppers with little free time are willing to pay more for convenience, while bargain hunters are price-sensitive and will only make purchases if the price is right. By discounting prices during the week, retailers can attract more bargain hunters and increase sales.

Question 11

Reduced competition through merging of companies will raise social welfare

Accepted Answer

If the benefit from the synergies, i.e. combining the strengths and resources of two companies, exceeds the negative impact of increased market power such as higher prices and reduced choice for consumers, then the merger can be beneficial for social welfare. However, if the negative effects outweigh the benefits, then the merger may harm competition and reduce social welfare. Therefore, it depends on the specific circumstances and should be carefully evaluated.

Question 12

In order for antitrust laws to raise social welfare,the government must

Accepted Answer

Antitrust laws aim to prevent anti-competitive practices and ensure market competition. For these laws to raise social welfare, the government needs to discern between mergers that are beneficial (e.g., those that lead to efficiencies and innovations that benefit consumers) and those that are harmful (e.g., those that reduce competition and harm consumer interests). This ability allows the government to prevent monopolistic behaviors that can lead to higher prices and lower quality for consumers while permitting mergers that can lead to greater efficiencies and benefits.

Question 13

Antitrust laws allow the government to

Accepted Answer

Antitrust laws allow the government to prevent mergers that would create a monopoly or reduce competition, break up companies that have a monopoly or engage in anti-competitive behavior, and promote competition in the marketplace. Therefore, all of the above options are correct.

Question 14

Antitrust laws have economic benefits that outweigh the costs if they

Accepted Answer

Antitrust laws are designed to prevent mergers that would decrease competition in the market. This helps to ensure that consumers have access to a range of products and services at fair prices. When mergers lead to increased market power and higher prices, antitrust laws prevent these negative effects. While antitrust laws may have some costs associated with them, such as the cost of enforcing the laws, the economic benefits of these laws typically outweigh the costs.

Question 15

Which of the following statements is not correct?

Accepted Answer

Antitrust laws do not automatically prevent mergers between companies that produce similar products. The government evaluates each proposed merger to determine if it would harm competition and potentially lead to higher prices or reduced quality for consumers.

Question 16

Which of the following is the most likely reason the city council in New York City consistently denies licenses to independent van drivers selling rides to the public?

Accepted Answer

The fact that the city council consistently denies licenses to independent van drivers suggests that there may be some reason for it beyond concerns for social welfare or price discrimination. The answer choice that indicates that the public transit monopoly is threatened and makes campaign contributions to city council members seems to provide the most likely reason for the denials.

Question 17

Splitting up a monopoly is often justified on the grounds that

Accepted Answer

Splitting up a monopoly is often justified on the grounds that competition is inherently efficient. Monopolies have the ability to charge higher prices and have less incentive to innovate or improve quality because of their lack of competitors. Breaking up a monopoly into smaller firms can increase competition, leading to more efficient markets, lower prices, and greater innovation.

Question 18

Which of the following statements is not correct?

Accepted Answer

The answer of Which of the following statements is not...

Question 19

One method used to control the ability of firms to capture monopoly profit in the United States is through

Accepted Answer

Antitrust laws are put in place to prevent monopolies and promote competition in the market. These laws aim to prevent firms from engaging in anti-competitive behavior, such as price fixing and monopolistic mergers, which can result in the capture of monopoly profits. By enforcing antitrust laws, the government can ensure that firms compete fairly in the market, which prevents the accumulation of excessive market power and the capture of monopoly profits.

Question 20

Antitrust laws allow the government to

Accepted Answer

Antitrust laws allow the government to break up companies that are deemed to have a monopoly or anti-competitive behavior in order to promote fair competition in the marketplace. The government does not collect any revenue from an antitrust tax, nor can it purchase privately-held companies through eminent domain.

Quiz 15: Monopoly

Antitrust laws may

Which of the following statements comparing monopoly with competition is correct?

The collection of statutes aimed at curbing monopoly power is called

Which of the following may eliminate some or all of the inefficiency that results from monopoly pricing?

The legislation passed by Congress in 1890 to reduce the market power of large and powerful "trusts" is called the

Which of the following is an example of price discrimination?

The first major piece of antitrust legislation was the

Which of the following statements is correct?

The legislation passed by Congress in 1914 to strengthen the government's powers and authorize private lawsuits is called the

Reduced competition through merging of companies will raise social welfare

In order for antitrust laws to raise social welfare,the government must

Antitrust laws allow the government to

Antitrust laws have economic benefits that outweigh the costs if they

Which of the following statements is not correct?

Which of the following is the most likely reason the city council in New York City consistently denies licenses to independent van drivers selling rides to the public?

Splitting up a monopoly is often justified on the grounds that

Which of the following statements is not correct?

One method used to control the ability of firms to capture monopoly profit in the United States is through

Antitrust laws allow the government to