Economic regulation of business is justified

Economic regulation of business is justified if, by intervening, government canQuestion 1 options:improve the allocation of resources in societycreate economic rents for special interest groupsreduce output and increase prices for an industryincrease tax revenue from the regulated industryforce firms to increase their costs of productionSaveQuestion 2 (1 point)Economic regulation is government policy designed toQuestion 2 options:improve health and safety in products and in working conditionsprevent firms from monopolizing or developing a cartel in existing competitive marketseliminate existing monopolies by breaking them apart into many smaller firmscreate monopolies by forcing competitive firms to mergecontrol price and output in industries where monopoly is desirableSaveQuestion 3 (1 point)If a firm can double inputs and, thereby, more than double output over the range of output the market demands, it is said to be experiencingQuestion 3 options:decreasing minimum efficient scaleincreasing returns to scaleconstant returns to scaledecreasing returns to scaleincreasing long run average costSaveQuestion 4 (1 point)The rail system in Metropolis is a natural monopoly. If the government regulates the system by setting the fare equal to marginal cost, which of the following will be true?Question 4 options:Price and output will be higher than if the monopoly were unregulated.Price and output will be lower than if the monopoly were unregulated.Price will be lower and output higher than if the monopoly were unregulated.Price will be higher and output lower than if the monopoly were unregulated.Profit will be lower than if the monopoly were unregulated, but price and output could either increase or decrease.SaveQuestion 5 (1 point)If government regulators force anatural monopolyto produce where price equals marginal cost, the monopoly will earnQuestion 5 options:a “fair return”positive economic profitzero economic profitnegative economic profitgreater economic profit than if it were unregulatedSaveQuestion 6 (1 point)If the government wants a natural monopoly to earn a “fair return” or zero economic profit, it will setQuestion 6 options:price equal to marginal costprice equal to average total costprice equal to average revenuemarginal cost equal to marginal revenuemarginal cost equal to average total costSaveQuestion 7 (1 point)Antitrust policy is designed toQuestion 7 options:improve health and safety in products and in working conditionsregulate the firms in industries where “cut-throat” competition is potentially damagingcreate monopolies by forcing competitive firms to mergecontrol price and output in industries where monopoly is desirablepromote competition and reduce anticompetitive behaviorSaveQuestion 8 (1 point)A physicians’ professional association supports legislation seeking higher quality medical care. According to the special interest theory of regulation, who likely will benefit most from this legislation?Question 8 options:Government, through decreased regulation of physician quality.Patients, through reduced prices for medical care.Physicians, through increased prices for medical care.Hospitals, through decreased for physicians’ services.Government, since higher quality health care is clearly in the public interest.SaveQuestion 9 (1 point)The Clayton Act prohibits all horizontal mergers, regardless of their economic consequences.Question 9 options:TrueFalseSaveQuestion 10 (1 point)Price discrimination that substantially lessens competition is prohibited by the Clayton Act.Question 10 options:TrueFalseSaveQuestion 11 (1 point)A camera manufacturer will sell its cameras only to retailers who agree to buy its brand of film. This is an example ofQuestion 11 options:price discriminationexclusive dealinga tying contractinterlocking directoratesa trustSaveQuestion 12 (1 point)Which act of Congress declared tying contracts, exclusive dealing, and price discrimination illegal?Question 12 options:the Wheeler-Kefauver Actthe Sherman Antitrust Actthe Clayton Actthe Wheeler-Lea Actthe Celler-Kefauver Anti-Merger ActSaveQuestion 13 (1 point)Under the rule of reason, no firm with a large market share could be found guilty of violating the Sherman Antitrust Act.Question 13 options:TrueFalseSaveQuestion 14 (1 point)The Herfindahl index is the sum of the squared market shares of the four largest firms in an industry.Question 14 options:TrueFalseSaveQuestion 15 (1 point)Under current guidelines, the U.S. Department of Justice usually challengesQuestion 15 options:all mergersmergers in industries that would have a postmerger Herfindahl index greater than 1,800mergers in industries that would have a postmerger Herfindahl index greater than 1,800 if the Herfindahl index increases by more than 100 pointsmergers in industries that would have a postmerger Herfindahl index greater than 1,000mergers in industries that would have a postmerger Herfindahl index greater than 1,000 if the Herfindahl index increases by more than 100 pointsSaveQuestion 16 (1 point)The United States economy has experienced a decrease in competition over the last three decades.Question 16 options:TrueFalseSaveQuestion 17 (1 point)The ability of a firm to raise the price without losing all its sales to rivals is calledQuestion 17 options:market powersocial regulationeconomic regulationantitrust policynatural monopolySaveQuestion 18 (1 point)Over time, regulatory machinery may shift toward the special interests of producers, who, in effect, “capture” the regulating agency.Question 18 options:TrueFalseSaveQuestion 19 (1 point)Because of the rise of global competition and free trade,Question 19 options:antitrust policy serves no purposeantitrust policy may be less necessary than previously thoughtU.S. industrial concentration poses more of a threat to consumersU.S. markets are becoming less contestableU.S. manufacturers are seeking fewer trade barriersSaveQuestion 20 (1 point)Increased international trade and deregulation have resulted inQuestion 20 options:increased competition in the U.S. economygreater monopolization of industries in the U.S. economymore oligopolies and cartels in the U.S. economygreater government intervention in the U.S. economyno changes in the U.S. economy