EEE 360 Final Exam
QUESTIONS AND VERIFIED
CORRECT ANSWERS
GRADED A+ [LATEST] 100%
GUARANTEED PASS
What does the Sherman Act Section 1 outlaw? - CORRECT ANSWER-Price fixing
Some of the bitterest arguments on antitrust law are based on disagreements about the aim of
the law. Which of the following is one of the aims of antitrust that everyone agrees on... -
CORRECT ANSWER-Making sure that no one who is willing to pay the cost of producing and
marketing something is prevented from having it because the price is too high
The basic model of competition taught in Econ 201 and similar microeconomics classes... -
CORRECT ANSWER-Does not allow for there to be degrees of competition—merely perfect
competition and monopoly
The definition of "harms competition" has many possible definitions. What is a "performance"
definition of an action that "harms competition?" - CORRECT ANSWER-An action that increases
deadweight loss
What is the usual justification for assuming that firms with market power set MC=MR despite
the fact that they do not calculate either Marginal Cost or Marginal Revenue? - CORRECT
ANSWER-Setting MR=MC is equivalent to setting profit margins based on consumer resistance,
which is something that firms do
,A prime example of a cartel is OPEC. But OPEC doesn't seem to act like a classic cartel. What is
odd about the organization in relation to what we know about cartels? - CORRECT ANSWER-
Cartels must act to punish cheating when it is observed, but OPEC has not done this.
Conspiracies to fix prices are often thought to be inherently unstable. The argument for this
perspective is that... (3) - CORRECT ANSWER-(1) The incentives of the individual firms do not
align with the group
(2) Cartels are illegal in the US and so you cannot enforce a cartel contract
(3) Cartel prices tend to be above Marginal Cost, leading firms to expand production
What seems logical from a legal perspective is often illogical from an economic perspective.
What is an example of the difference in the economic and legal perspective? - CORRECT
ANSWER-The different treatment given in the law to tacit and overt collusion
What is NOT usually considered to be a barrier to entry into an industry - CORRECT ANSWER-
Finding someone who has the expertise to successfully organize production where none had
existed before
Name (3) popular barriers to entry into an industry - CORRECT ANSWER-(1) The ownership of
scarce raw materials.
Product differentiation—in particular the preference of consumers for familiar brands
(2) Product differentiation—in particular the preference of consumers for familiar brands
(3) A large minimum efficient scale in an industry as a proportion of industry sales
,What is the main economic argument in favor of a lenient perspective towards mergers? -
CORRECT ANSWER-The threat of take-overs may reduce X-inefficiency
The concentration of an industry is usually measured based on the statistics of the North
American Industrial Classification System. This classification distinguishes between four digit
and five digit industries. What is the difference between a four and five digit industry? -
CORRECT ANSWER-A four digit industry contains several five digit product lines
The "Merger Guidelines" of the US Department of Justice's Antitrust Division are often claimed
to have almost the power of law despite never having been part of a bill signed into law. Why
are the Merger Guidelines considered to be so powerful? - CORRECT ANSWER-Federal law
prevents a merger from going through until all legal challenges are settled
Why are more concentrated industries usually considered to be less competitive? (3) - CORRECT
ANSWER-(1) In a more concentrated industry, it is easier to determine who is cheating
(2) In a more concentrated industry, tacit collusion is easier
(3) In a more concentrated industry, there is less likelihood of a maverick who simply does not
want to get along with other firms in the industry
The "Merger Guidelines" of the US Department of Justice's Antitrust Division are calculated
from... - CORRECT ANSWER-Levels and changes in the sum of squared market percentages of all
firms in an industry
A New York Times editorial blasted the US Department of Justice for approving the merger of
Live Nation and Ticketmaster. According to the editorial, the Federal authorities should have
taken the merger parties to court in order to make new law on a disturbing trend. Instead, the
Department of Justice... - CORRECT ANSWER-Decided to consider only the horizontal aspects of
the merger, ignoring the vertical issues
, The main implication of the model of double marginalization is that... - CORRECT ANSWER-
Vertical integration may improve economic performance of an industry
Proctor and Gamble was prevented from merging with Clorox Corporation, claiming that the
merger was anti-competitive despite the fact that neither company produced products that
were equivalent to those produced by the other company. The claim of anticompetitive effect
was instead based on... - CORRECT ANSWER-Potential Competition
In analyzing vertical mergers, the first place where one looks for an anticompetitive effect is... -
CORRECT ANSWER-Market foreclosure
What is the main concern about resale price maintenance when an economist tries to evaluate
whether the practice is a violation of section 3 of the Clayton Act? - CORRECT ANSWER-Resale
price maintenance may be a tool that retailers can use to avoid competing on price with each
other
What was the charge made against Master Card and Visa in the case that the credit card issuers
lost? - CORRECT ANSWER-Market Foreclosure
If a cable TV firm like Comcast were to have its practice of refusing to allow customers to buy its
channels individually, but only selling them in bundles of channels, the most likely challenge
would be that this practice represents illegal... - CORRECT ANSWER-Tying
Free-market oriented economists have a fundamental hostility to Section 2 of the Sherman Act.
What is their logic? - CORRECT ANSWER-In the standard model of industries, it is impossible for
a firm to drive another out of business and keep it out
What were (3) actions taken by John D. Rockefeller's Standard Oil company that caused it to be
convicted of violating Section 2 of the Sherman Act? - CORRECT ANSWER-(1) Extracted rebates
from transportation companies
QUESTIONS AND VERIFIED
CORRECT ANSWERS
GRADED A+ [LATEST] 100%
GUARANTEED PASS
What does the Sherman Act Section 1 outlaw? - CORRECT ANSWER-Price fixing
Some of the bitterest arguments on antitrust law are based on disagreements about the aim of
the law. Which of the following is one of the aims of antitrust that everyone agrees on... -
CORRECT ANSWER-Making sure that no one who is willing to pay the cost of producing and
marketing something is prevented from having it because the price is too high
The basic model of competition taught in Econ 201 and similar microeconomics classes... -
CORRECT ANSWER-Does not allow for there to be degrees of competition—merely perfect
competition and monopoly
The definition of "harms competition" has many possible definitions. What is a "performance"
definition of an action that "harms competition?" - CORRECT ANSWER-An action that increases
deadweight loss
What is the usual justification for assuming that firms with market power set MC=MR despite
the fact that they do not calculate either Marginal Cost or Marginal Revenue? - CORRECT
ANSWER-Setting MR=MC is equivalent to setting profit margins based on consumer resistance,
which is something that firms do
,A prime example of a cartel is OPEC. But OPEC doesn't seem to act like a classic cartel. What is
odd about the organization in relation to what we know about cartels? - CORRECT ANSWER-
Cartels must act to punish cheating when it is observed, but OPEC has not done this.
Conspiracies to fix prices are often thought to be inherently unstable. The argument for this
perspective is that... (3) - CORRECT ANSWER-(1) The incentives of the individual firms do not
align with the group
(2) Cartels are illegal in the US and so you cannot enforce a cartel contract
(3) Cartel prices tend to be above Marginal Cost, leading firms to expand production
What seems logical from a legal perspective is often illogical from an economic perspective.
What is an example of the difference in the economic and legal perspective? - CORRECT
ANSWER-The different treatment given in the law to tacit and overt collusion
What is NOT usually considered to be a barrier to entry into an industry - CORRECT ANSWER-
Finding someone who has the expertise to successfully organize production where none had
existed before
Name (3) popular barriers to entry into an industry - CORRECT ANSWER-(1) The ownership of
scarce raw materials.
Product differentiation—in particular the preference of consumers for familiar brands
(2) Product differentiation—in particular the preference of consumers for familiar brands
(3) A large minimum efficient scale in an industry as a proportion of industry sales
,What is the main economic argument in favor of a lenient perspective towards mergers? -
CORRECT ANSWER-The threat of take-overs may reduce X-inefficiency
The concentration of an industry is usually measured based on the statistics of the North
American Industrial Classification System. This classification distinguishes between four digit
and five digit industries. What is the difference between a four and five digit industry? -
CORRECT ANSWER-A four digit industry contains several five digit product lines
The "Merger Guidelines" of the US Department of Justice's Antitrust Division are often claimed
to have almost the power of law despite never having been part of a bill signed into law. Why
are the Merger Guidelines considered to be so powerful? - CORRECT ANSWER-Federal law
prevents a merger from going through until all legal challenges are settled
Why are more concentrated industries usually considered to be less competitive? (3) - CORRECT
ANSWER-(1) In a more concentrated industry, it is easier to determine who is cheating
(2) In a more concentrated industry, tacit collusion is easier
(3) In a more concentrated industry, there is less likelihood of a maverick who simply does not
want to get along with other firms in the industry
The "Merger Guidelines" of the US Department of Justice's Antitrust Division are calculated
from... - CORRECT ANSWER-Levels and changes in the sum of squared market percentages of all
firms in an industry
A New York Times editorial blasted the US Department of Justice for approving the merger of
Live Nation and Ticketmaster. According to the editorial, the Federal authorities should have
taken the merger parties to court in order to make new law on a disturbing trend. Instead, the
Department of Justice... - CORRECT ANSWER-Decided to consider only the horizontal aspects of
the merger, ignoring the vertical issues
, The main implication of the model of double marginalization is that... - CORRECT ANSWER-
Vertical integration may improve economic performance of an industry
Proctor and Gamble was prevented from merging with Clorox Corporation, claiming that the
merger was anti-competitive despite the fact that neither company produced products that
were equivalent to those produced by the other company. The claim of anticompetitive effect
was instead based on... - CORRECT ANSWER-Potential Competition
In analyzing vertical mergers, the first place where one looks for an anticompetitive effect is... -
CORRECT ANSWER-Market foreclosure
What is the main concern about resale price maintenance when an economist tries to evaluate
whether the practice is a violation of section 3 of the Clayton Act? - CORRECT ANSWER-Resale
price maintenance may be a tool that retailers can use to avoid competing on price with each
other
What was the charge made against Master Card and Visa in the case that the credit card issuers
lost? - CORRECT ANSWER-Market Foreclosure
If a cable TV firm like Comcast were to have its practice of refusing to allow customers to buy its
channels individually, but only selling them in bundles of channels, the most likely challenge
would be that this practice represents illegal... - CORRECT ANSWER-Tying
Free-market oriented economists have a fundamental hostility to Section 2 of the Sherman Act.
What is their logic? - CORRECT ANSWER-In the standard model of industries, it is impossible for
a firm to drive another out of business and keep it out
What were (3) actions taken by John D. Rockefeller's Standard Oil company that caused it to be
convicted of violating Section 2 of the Sherman Act? - CORRECT ANSWER-(1) Extracted rebates
from transportation companies
