Economics Chapter 11 Test Bank
Multiple Choice Questions
1. A business_____________occurs when, for practical purposes, one firm purchases another.
A. merger
B. loss
C. acquisition
D. antitrust violation
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
2. ___________ give government the power to block certain mergers, and in some cases, to
break up large firms into smaller ones.
A. Market regulations
B. Antitrust laws
C. Nationalization policies
D. Restrictive practices
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
3. The four-firm __________ measures the percentage share of the total sales in the industry
that is accounted for by the largest four firms.
A. coordination ratio
B. market share ratio
C. concentration ratio
D. production ratio
Answer: C
Reference:
Explanation:
This file is copyright 2023, Rice University. All Rights Reserved.
,Type: Multiple Choice Difficulty: Easy Category: Remember
4. The term __________ refers to the percentage share of a firm's total sales in the market.
A. market share
B. concentration ratio
C. total market ratio
D. market cap
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
5. The Herfindahl-hirschman index is calculated by taking ___________, squaring it, and adding
them up to get a total.
A. concentration ratio of each firm in the industry
B. total revenues of each firm in the industry
C. market share of each firm in the industry
D. market capitalization of each firm in the industry
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
6. Practices that reduce competition without actual documented agreements between firms to
raise price are commonly referred to as .
A. legal practices
B. competitive practices
C. regulated practices
D. restrictive practices
Answer: D
Reference:
Explanation:
This file is copyright 2023, Rice University. All Rights Reserved.
,Type: Multiple Choice Difficulty: Easy Category: Remember
7. A minimum resale price maintenance agreement requires a dealer who buys from a
manufacturer ______________.
A. to sell for at least a certain minimum price
B. to avoid engaging in restrictive practices.
C. to guarantee a certain percentage of market share
D. to sell for at least a certain maximum price
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
8. An agreement between a manufacturer and a distributor stipulating that a dealer will only
distribute that manufacturer's products would be classified as a form of
A. predatory pricing.
B. tie-in-sales arrangement.
C. exclusive dealing.
D. price maintenance.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
9. A manufacturer that only allows a consumer to purchase one product if they also buy another
product is using _____________ to increase its profits.
A. exclusive dealing
B. tie-in sales
C. predatory pricing
D. bundle dealing
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
This file is copyright 2023, Rice University. All Rights Reserved.
, 10. The term "tie-in sales" is synonymous with
A. price maintenance
B. exclusive dealing
C. bundling
D. predatory pricing
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
11. Regulations that permit a regulated firm to cover its costs and to make a normal level of
profit are commonly referred to as
A. cost-plus regulation.
B. price cap regulations.
C. regulatory capture.
D. profit regulation.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
12. When the regulator sets a price that a firm cannot exceed over the next few years, the
regulator is enforcing
A. deregulation.
B. price cap regulation.
C. cost-plus regulation
D. regulatory capture rules.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
This file is copyright 2023, Rice University. All Rights Reserved.
Multiple Choice Questions
1. A business_____________occurs when, for practical purposes, one firm purchases another.
A. merger
B. loss
C. acquisition
D. antitrust violation
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
2. ___________ give government the power to block certain mergers, and in some cases, to
break up large firms into smaller ones.
A. Market regulations
B. Antitrust laws
C. Nationalization policies
D. Restrictive practices
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
3. The four-firm __________ measures the percentage share of the total sales in the industry
that is accounted for by the largest four firms.
A. coordination ratio
B. market share ratio
C. concentration ratio
D. production ratio
Answer: C
Reference:
Explanation:
This file is copyright 2023, Rice University. All Rights Reserved.
,Type: Multiple Choice Difficulty: Easy Category: Remember
4. The term __________ refers to the percentage share of a firm's total sales in the market.
A. market share
B. concentration ratio
C. total market ratio
D. market cap
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
5. The Herfindahl-hirschman index is calculated by taking ___________, squaring it, and adding
them up to get a total.
A. concentration ratio of each firm in the industry
B. total revenues of each firm in the industry
C. market share of each firm in the industry
D. market capitalization of each firm in the industry
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
6. Practices that reduce competition without actual documented agreements between firms to
raise price are commonly referred to as .
A. legal practices
B. competitive practices
C. regulated practices
D. restrictive practices
Answer: D
Reference:
Explanation:
This file is copyright 2023, Rice University. All Rights Reserved.
,Type: Multiple Choice Difficulty: Easy Category: Remember
7. A minimum resale price maintenance agreement requires a dealer who buys from a
manufacturer ______________.
A. to sell for at least a certain minimum price
B. to avoid engaging in restrictive practices.
C. to guarantee a certain percentage of market share
D. to sell for at least a certain maximum price
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
8. An agreement between a manufacturer and a distributor stipulating that a dealer will only
distribute that manufacturer's products would be classified as a form of
A. predatory pricing.
B. tie-in-sales arrangement.
C. exclusive dealing.
D. price maintenance.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
9. A manufacturer that only allows a consumer to purchase one product if they also buy another
product is using _____________ to increase its profits.
A. exclusive dealing
B. tie-in sales
C. predatory pricing
D. bundle dealing
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
This file is copyright 2023, Rice University. All Rights Reserved.
, 10. The term "tie-in sales" is synonymous with
A. price maintenance
B. exclusive dealing
C. bundling
D. predatory pricing
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
11. Regulations that permit a regulated firm to cover its costs and to make a normal level of
profit are commonly referred to as
A. cost-plus regulation.
B. price cap regulations.
C. regulatory capture.
D. profit regulation.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
12. When the regulator sets a price that a firm cannot exceed over the next few years, the
regulator is enforcing
A. deregulation.
B. price cap regulation.
C. cost-plus regulation
D. regulatory capture rules.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
This file is copyright 2023, Rice University. All Rights Reserved.
