Chapter 13 Multiple Choice Quiz

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. Which one of the following types of government regulation does not limit competition and create artificial market power?

A. Licensing regulations correct incorrect

B. Patents correct incorrect

C. Copyrights correct incorrect

D. All of the above limit competition and create artificial market power. correct incorrect

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. Which of the following is not a law designed to protect the consumers of products?

A. Warranty Act of 1975 correct incorrect

B. Federal Trade Commission Act of 1914 correct incorrect

C. 1990 Nutrition Labeling Act correct incorrect

D. All of the above are designed to protect the consumers of products. correct incorrect

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. If an increase in output by a firm imposes uncompensated costs on other firms, these costs are referred to as

A. external diseconomies of production. correct incorrect

B. external economies of production. correct incorrect

C. external diseconomies of consumption. correct incorrect

D. external economies of consumption. correct incorrect

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. If an increase in output by a firm confers uncompensated benefits to other firms, these benefits are referred to as

A. external diseconomies of production. correct incorrect

B. external economies of production. correct incorrect

C. external diseconomies of consumption. correct incorrect

D. external economies of consumption. correct incorrect

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. If the consumption expenditures of some individuals impose uncompensated costs on other individuals, these costs are referred to as

A. external diseconomies of production. correct incorrect

B. external economies of production. correct incorrect

C. external diseconomies of consumption. correct incorrect

D. external economies of consumption. correct incorrect

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. If the consumption expenditures of some individuals confer uncompensated benefits on other individuals, these benefits are referred to as

A. external diseconomies of production. correct incorrect

B. external economies of production. correct incorrect

C. external diseconomies of consumption. correct incorrect

D. external economies of consumption. correct incorrect

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. Government regulation of natural monopolies typically sets the market price so that the level of output corresponds to the point of intersection between long-run

A. marginal cost and marginal revenue. correct incorrect

B. marginal cost and demand. correct incorrect

C. average cost and marginal revenue. correct incorrect

D. average cost and demand. correct incorrect

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. Natural monopolies will produce a socially optimal level of output if government subsidies ensure an economic profit of zero and the market price is set by regulators at the point of intersection between long-run

A. marginal cost and marginal revenue. correct incorrect

B. marginal cost and demand. correct incorrect

C. average cost and marginal revenue. correct incorrect

D. average cost and demand. correct incorrect

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. Which of the following is not a complication encountered by public utility regulatory commissions when they set rates?

A. It is difficult to determine the economic value of a public utility's fixed assets. correct incorrect

B. Public utilities typically engage in price discrimination, so many different rates must be determined. correct incorrect

C. The services provided by public utilities are typically jointly produced, so the allocation of costs among different services is difficult or impossible. correct incorrect

D. All of the above are problems that are encountered when regulatory commissions set rates. correct incorrect

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. The Averch-Johnson effect refers to

A. the inefficiencies that result when regulators set public utility rates too high or too low. correct incorrect

B. the tendency toward natural monopoly in firms that have downward-sloping long-run average cost curves. correct incorrect

C. the 9 to 12 month time lag between recognition of a need for rate revision and action by regulatory commissions. correct incorrect

D. All of the above are correct. correct incorrect

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. Which of the following made monopolization and restraint of trade illegal?

A. Robinson-Patman Act correct incorrect

B. Sherman Act correct incorrect

C. Clayton Act correct incorrect

D. None of the above is correct. correct incorrect

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. Which of the following prohibits tying contracts?

A. Robinson-Patman Act correct incorrect

B. Sherman Act correct incorrect

C. Clayton Act correct incorrect

D. None of the above is correct. correct incorrect

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. Which of the following made it illegal to charge unreasonably low prices with the intention of destroying competition or eliminating competitors?

A. Robinson-Patman Act correct incorrect

B. Sherman Act correct incorrect

C. Clayton Act correct incorrect

D. None of the above is correct. correct incorrect

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.

Which of the following stated that "unfair methods of competition" are unlawful?

A. Robinson-Patman Act correct incorrect

B. Sherman Act correct incorrect

C. Clayton Act correct incorrect

D. None of the above is correct. correct incorrect

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. The Wheeler-Lea Act was designed to protect consumers from

A. monopoly. correct incorrect

B. unfair methods of competition. correct incorrect

C. false or deceptive advertising. correct incorrect

D. None of the above is correct. correct incorrect

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. Most antitrust actions have been settled by means of

A. dissolution and divestiture. correct incorrect

B. an injunction. correct incorrect

C. a consent decree. correct incorrect

D. fines and jail sentences. correct incorrect

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. Which of the following is always illegal?

A. Price discrimination correct incorrect

B. Collusion correct incorrect

C. Monopoly correct incorrect

D. Interlocking directorates correct incorrect

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. Which of the following industries was not deregulated during the 1970s and 1980s?

A. Airlines correct incorrect

B. Electricity generation and distribution correct incorrect

C. Telecommunications correct incorrect

D. Banking correct incorrect

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. Which of the following do not protect domestic producers from foreign competition?

A. Import tariffs correct incorrect

B. Import quotas correct incorrect

C. Voluntary export restrictions correct incorrect

D. All of the above protect domestic producers from foreign competition. correct incorrect

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. Which of the following will not result from the imposition of an import tariff on a commodity?

A. The supply of the commodity will increase. correct incorrect

B. The price of the commodity will increase. correct incorrect

C. Domestic production of the commodity will increase. correct incorrect

D. All of the above will result from an import tariff. correct incorrect