Chapter 18. Antitrust Policy and Regulation

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*The Celler-Kefauver Act of 1950 amended the ___ Act

the Clayton Act

The FTC Act of 1914 originally gave the government what powers (2)

investigate unfair business practices and issue cease-and-desist orders

What are the Herfindahl Indexes of a firm in pure competition and pure monopoly

0 and 10,000

*Social, as distinct from industrial, regulation is the major focus of the FCC, FTC, CPSC, or FERC.

CPSC - Consumer Products Safety Commission.

*All of the following (FCC, 50 state utility commission, FDA, and FERC) are regulatory commissions dealing with industrial regulation (as distinct from social regulation) except the:

FDA - Food and Drug Administration

*A firm charged with monopolizing a market is less likely to be convicted if the courts accepts a ____ definition of the market.

a broad definition of the market.

*Critics of industrial regulation say that such regulation _____ monopoly long after new technology has eroded natural monopoly.

perpetuates monopoly long after new technology has eroded natural monopoly.

*The decision in the U.S. Steel case reflected what approach to antitrust

reflected a behavioralist approach to antitrust.

*In 2001, Microsoft was found guilty of violating what act and what sections?

Sections 1 and 2 of the Sherman Act were violated by this company in 2001.

*In the U.S. Steel case, the court ruled that:

only monopolies that unreasonably restrain trade are subject to antitrust action under the Sherman Act.

*Which one of the following is concerned with social regulation (EEOC, FERC, FCC)

EEOC - Equal Employment Opportunity Commission

*A merger of several firms operating in different industries-for example, a trucking company, a fast-food chain, and a brokerage house-is called a _____ merger.

a conglomerate merger.

*The view that the antitrust laws need to be strongly enforced to prevent illegal business behaviors, monopolization of markets, and allocative inefficiency is known as the ____ antitrust perspective.

active antitrust perspective.

*Antitrust authorities are least likely to take action against ___ mergers.

conglomerate mergers.

*The antitrust laws are enforced by what 2 federal agencies

Federal Justice Department and the Federal Trade Commission.

*A _____ merger between two of the industry's largest firms is most likely to increase the Herfindahl index of a particular industry

a horizontal merger between two of the industry's largest firms.

*A merger between an automobile manufacturer and a maker of automobile tires is an example of a:

vertical merger.

*A vertical merger involves a combining of one or more firms operating ____ ____ ____ of the production process in a particular industry.

operating at different stages of the production process in a particular industry.

*A major criticism of industrial regulation is that by allowing a ____ _____ price, it gives natural monopolists little incentive to contain costs.

by allowing a "fair return" price

*The optimal amount of social regulation occurs where the marginal benefit of such regulation equals the ____ ____.

equals the marginal cost.

*Price Fixing is a per se violation of the ____ ____ laws

is a per se violation of the antitrust laws.

*Overall, economists believe that deregulation of industries formerly subjected to industrial regulation has produced ____ ____ ____ for consumers and societ.

has produced large net benefits for consumers and society.

*Movie producers A, B, and C secretly meet and agree to release their summer blockbuster films in sequence, rather than at the same time. The U.S. Justice Department learns of the agreement and files an antitrust suit. The Federal government would most likely file charges under what act and what section?

Sherman Act, Section 1.

*The ____ ____ Act of ____ amended the Clayton Act's prohibition against mergers that substantially lessen competition.

The Celler-Kefauver Act of 1950

*A ____ merger is most likely to increase the Herfindahl index of a particular industry?

horizontal merger

*A merger between a maker of household detergents and a fast food chain would be an example of a ____ merger.

a conglomerate merger.

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