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Economic
Q:
Private interests affect regulatory agencies directly through their participation in hearings and other regulatory proceedings and indirectly through pressure on Congress and the executive branch.
Q:
The executive branch can influence regulatory commissions through the policy expertise of cabinet agencies.
Q:
Interested parties can participate in both formal and informal rule-making proceedings but are unable to attempt to influence agency actions outside the proceedings.
Q:
Independent regulatory commissions are immune from Congressional oversight or interference in their affairs.
Q:
Write a short note on antitrust laws.
Q:
Discuss compliance with antitrust laws from the perspective of firms.
Q:
What are barriers to entry?
Q:
Describe the implication of antitrust policy on the management of a firm.
Q:
What is antitrust policy? How do these laws represent social and economic policy?
Q:
The Herfindahl-Hirschman Index (HHI) is used by the Department of Justice and Federal Trade Commission to measure the ________.
a) fine amount in antitrust lawsuits
b) amount of hard money available to a firm
c) market shares of a firm
d) concentration in an industry
Q:
Mergers ________.
a) encourage competition in supply and distribution channels
b) eliminate inefficient cross-subsidization
c) yields cost inefficiencies that bring losses to customers
d) remove effective management
Q:
The new IO perspective on collusion and price fixing is that ________.
a) antitrust supervision is necessary
b) firms will collude when possible
c) it easier to sustain
d) it difficult to sustain
Q:
The Chicago school of thought to reasoning about antitrust concludes that predatory pricing ________.
a) provides incentives that allows firms to engage in such acts
b) can deter some entry that would be desirable from the perspective of economic efficiency.
c) can drive a competitor out of a market by cutting prices below the competitors costs
d) is unlikely to be successful, so it will not be attempted
Q:
TRUEware is a leading computer hardware manufacturer based in California. Two dealers of TRUEware compete against each other to make higher sales and profit margin. Which of the following is applicable to this situation?
a) entry deterrence
b) intraband competition
c) interband competition
d) horizontal arrangement
Q:
Under the Chicago school of thought, the purpose of antitrust policy is ________.
a) maximization of producers plus consumers surplus.
b) focuses on the opportunities for strategic behavior
c) focuses on the objectives of static and dynamic efficiency
d) is intended to improve economic performance and further the social objective of limiting economic power.
Q:
Under the structural or traditional approach, collusion in concentrated industries _____________.
a) is possible with repeated encounters
b) is difficult to enforce
c) increases profits
d) reduces efficiency
Q:
Which of the following portrays the new Industrial Organization view of markets?
a) markets are fragile and prone to failure
b) market power can only arise from horizontal power
c) markets are resilient and imperfections can be addressed through incentives
d) most markets are resilient and strategic behavior can limit efficiency
Q:
Which of the following violations is not per se illegal in antitrust laws?
a) allocation of customers among competitors
b) maximum price resale maintenance
c) price fixing
d) output restraints
Q:
The ________ prohibits price discrimination not justified by cost differences in serving customers.
a) Federal Trade Commission Act
b) Clayton Act
c) Robinson-Patman Act
d) Sherman Act
Q:
Which of the following is not applicable to a consent decree?
a) involves judicial determination
b) binds only consenting parties
c) may remain in effect indefinitely
d) does not set a precedent for other cases
Q:
Which of the following penalties is available in criminal cases?
a) injunctive relief
b) divestment of business units
c) dissolved contracts
d) fines
Q:
Only the ________ can bring criminal charges under the antitrust laws.
a) Federal Trade Commission
b) Department of Justice
c) Interstate Commerce Act
d) The Clayton Act
Q:
Which of the following portrays horizontal price fixing arrangement subject to antitrust scrutiny?
a) Three manufacturers with a large market share for printed circuit for cell phones agree to control the prices in the industry.
b) A cell phone hardware manufacturer requires dealers to carry only its parts.
c) A leading cell phone manufacturer requires retailers to sell at the price specified by the company.
d) Two manufacturers of printed circuit for cell phones announce a merger that would create a monopoly in the industry.
Q:
Which of the following portrays a tying arrangement subject to antitrust scrutiny?
a) A manufacturer of flight navigation system requires retailers to sell at a price it specifies.
b) A manufacturer of flight communication systems requires dealers to carry only its parts.
c) Navigation system manufacturers of U.S refuse to sell such critical parts to a leading aircraft manufacturer.
d) A manufacturer of flight communication system grants exclusive rights to a distributing firm.
Q:
Which of the following is a horizontal practice subject to antitrust scrutiny?
a) A manufacturer of flight navigation system requires retailers to sell at a price it specifies.
b) A manufacturer of flight communication system grants exclusive rights to a distributing firm.
c) Navigation system manufacturers of U.S refuse to sell these critical parts to a leading aircraft manufacturer.
d) Two aircraft manufacturers announce a merger that would create a monopoly in the national aircraft manufacturing industry.
Q:
Vertical practices subject to antitrust scrutiny involves ________.
a) resale price maintenance
b) predatory pricing
c) monopolization
d) allocation of customers
Q:
Which of the following Acts does not provide for private lawsuits?
a) Federal Trade Commission Act
b) Robinson-Patman Act
c) Sherman Act
d) Clayton Act
Q:
The Federal Trade Commission Act ________.
a) addresses monopolization and restraints in their incipiency
b) prohibits unfair methods of competition and unfair or deceptive acts
c) focuses on unilateral conduct
d) pertains to unreasonable restraints of trade with a focus on joint conduct
Q:
The Clayton Act ________.
a) pertains to unreasonable restraints of trade with a focus on joint conduct
b) prohibits unfair methods of competition and unfair or deceptive acts
c) focuses on unilateral conduct and proscribes attempts to monopolize
d) addresses potentially anticompetitive actions
Q:
The ________ pertains to unreasonable restraints of trade with a focus on joint conduct.
a) Federal Trade Commission Act
b) Robinson-Patman Act
c) Sherman Act
d) Clayton Act
Q:
The Chicago school of thought to reasoning about antitrust focuses on the ________.
a) functioning of markets and the nature of competition
b) conduct that may foreclose opportunities or diminish competition
c) social and political objectives of industries
d) implication of informational asymmetries among market participants
Q:
Antitrust policies are not concerned with ________.
a) conduct of market participants
b) structure of markets
c) protecting competition
d) protecting competitors
Q:
As social policy, antitrust laws are________.
a) concerned with the structure of markets
b) focused on protecting competition and by doing so to benefit consumers
c) concerned with concentrations of economic power and the potential for abuse inherent in that concentration
d) concerned with the conduct of market participants
Q:
________ was the first federal antitrust statute.
a) Interstate Commerce Act of 1887
b) Sherman Act
c) Clayton Act of 1914
d) Federal Trade Commission Act
Q:
Firms need to provide training and guidance to employees to deal with antitrust concerns.
Q:
The new IO approach to antitrust is derived from the economics of modern industrial organization.
Q:
The structural school of thought to reasoning about antitrust believes that markets are resilient and imperfections can be addressed through incentives.
Q:
The Industrial Organization school of thought believes that government intervention in markets is intended to improve economic performance.
Q:
The courts do not decide which rule is applicable on a case-by-case basis but instead hold that certain practices are per se illegal and others are not.
Q:
Under antitrust laws, the burden of proof to show that the act committed is not unreasonable is on the defendant.
Q:
A defendant has two defenses under the rule of reasonthe first is that defendant did not commit the crime and the second is that, although the defendant committed the act, it was not unreasonable to do so.
Q:
Government enforcement of antitrust laws is more widespread than private enforcement.
Q:
Individuals and managers cannot be subject to fines under the Antitrust Procedures and Penalties Act.
Q:
In addition to a cost difference defense, a firm can defend itself by arguing that the price discrimination was necessary to meet competition.
Q:
The Federal Trade Commission cannot initiate its own investigations of practices it believes may violate antitrust laws.
Q:
Fines cannot be imposed in civil cases except to compensate the government for actual damages when it is a purchaser of goods and services.
Q:
As a result of the agreement between the Department of Justice and the Federal Trade Commission, cases are allocated primarily by the nature of the complaint and secondarily by industry.
Q:
Both the Department of Justice (DOJ) and the Federal Trade Commission (FTC) have the authority to enforce the Sherman Act and the Clayton Act, but only the FTC can enforce the Federal Trade Commission Act.
Q:
A conglomerate merger involves two firms that do not operate in the same industries either as competitors or as part of a channel of distribution or supply.
Q:
A leading video game console manufacturer requires dealers to carry only its products. Considering all things constant, an antitrust suit may be filed against the manufacturer.
Q:
A lens manufacturing firm convinces other manufactures in the industry to halt supplies to a distributor. Considering all things constant, the lens manufacturing firms are not liable to an antitrust suit.
Q:
Vertical merger involves two firms in the same industry.
Q:
Price discrimination practice is a vertical practice under antitrust laws.
Q:
Exemptions are also provided under the antitrust laws.
Q:
Vertical practices under the antitrust laws involve allocation of territories by a manufacturer among distributors or retailers, refusals to deal, and tying.
Q:
Horizontal practices that come under the antitrust laws are those involving firms in a supply arrangement or a channel of distribution.
Q:
The Sherman Act allows private parties to bring lawsuits for practices that are illegal under the Act.
Q:
Monopolization is also addressed under the antitrust laws.
Q:
Antitrust law includes only statutes and not the court decisions interpreting those statutes.
Q:
Antitrust: Economics, Law, and Politics
True and False Questions:
Q:
Discuss judicial actions as an implementation strategy for nonmarket issues.
Q:
Write a short note on coalition building.
Q:
What are the three basic purposes of campaign contributions?
Q:
What are the principles of effective lobbying?
Q:
Describe the broadening of the scope of lobbying.
Q:
________ is a necessary condition for lobbying.
a) Bargaining
b) Government allies
c) Access
d) Testimony
Q:
Which of the following implementation activities is the most expensive?
a) judicial action
b) letter-writing
c) e-mailing
d) testimony
Q:
a) testimony
b) judicial action
c) grassroots campaign
d) public advocacy
Answer: B
Q:
In response to the governments decision to increase the taxes on the food industry, companies involved in the food services industry decide to form a coalition. It works together and launches advertisements to reveal the effect of the legislation on peoples monthly expenditure and future savings. Which of the following is applicable here?
a) lobbying
b) peak associations
c) electoral support
d) public advocacy
Q:
A social networking site generates support to pass legislation on carbon taxes by emailing members of Congress. Which of the following is applicable here?
a) peak association
b) ad hoc coalitions
c) grassroots actions directed at government officeholders
d) grassroots actions directed at constituents
Q:
To the extent that their interests on an issue are aligned with those of the firm, ________ may be relatively easy to include in a grassroots program.
a) shareholders
b) employees
c) suppliers
d) franchisees
Q:
Which of the following is the least expensive grassroots activity?
a) letter-writing
b) telephone-call
c) petition
d) bus-in
Q:
GLOBEagents is formed by individual travel agents, travel organizations, food services and other sub sectors of the travel industry in ColoradoState to work for state legislation on travel taxes. GLOBEagents is a ________.
a) political coalition
b) peak associations
c) ad hoc coalition
d) trade associations
Q:
Which of the following is a nonmarket function of trade associations?
a) development of technical standards
b) research
c) collection of industry statistics
d) reducing the cost of information acquisition
Q:
________ includes firms from a number of industries and thus represent a range of interests.
a) Political coalition
b) Peak associations
c) Trade associations
d) Ad hoc coalition
Q:
________ are the principal means of forging a majority from a collection of minorities.
a) Coalitions
b) Campaign contributions
c) Representation and information strategies
d) Grassroots campaigns
Q:
In terms of campaign financing, hard money refers to ________.
a) the amount of money required to buy a favor from officeholders
b) the impact of an alternative on the constituents or policy interests of an officeholder
c) contributions to a candidates campaign
d) expenditures in electoral campaigns
Q:
A pharmaceutical manufacturing firm wants to contribute to the presidential election campaign in support of a pro-industry policies candidate. The firm should ________.
a) directly contribute to the campaign to influence legislative voting
b) form multicandidate political action committee for the purpose of soliciting contributions
c) collect funds for political contributions through dues
d) contribute using hard money because there is no limit on its use
Q:
Which of the following statements is true of campaign financing?
a) huge amounts of campaign spending is involved in federal elections
b) contributions buy favors from officeholders
c) corporations provide bulk of the funding for campaigns
d) contributions make firms gain access to members of Congress for lobbying
Q:
The Ethics in Government Act of 1978 ________.
a) requires lobbyists to register with the clerk of the House and the secretary of the Senate
b) restricts the contacts of former executive branch officials and regulators with their former agencies for a 2-year period
c) prohibits gifts to the members of Congress, including dinners and privately paid travel to conventions and events
d) requires registration of those who lobby the executive branch and the staffs of Congress members