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Multiple Choice Pre Quiz
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1

_______ consists of government rules or market incentives designed to control the price, sale, or production decisions of firms.
A)Taxation
B)Regulation
C)Integration
D)None of the above
2

Which of the following is associated with social regulation?
A)It is used to protect the environment along with the health and safety of workers and consumers.
B)It is aimed at correcting externalities that result from economic activity.
C)both a and b
D)neither a nor b
3

Economies of scope arise when _______ and can result in _______.
A)a number of different products can be produced more efficiently together than apart; perfect competition.
B)a number of different products can be produced more efficiently together than apart; natural monopoly.
C)externalities are present; monopolistic competition.
D)firms are producing in an oligopoly; natural monopoly.
4

What is the justification for zoning regulation?
A)Zoning regulation prevents any one firm from owning all the land in a town.
B)Zoning regulation ensures that unemployment is low.
C)Zoning regulation ensures that residents in communities do not have far to go to the supermarket.
D)Zoning regulation helps to prevent externalities from businesses spilling over onto residents whose homes might otherwise be nearby.
5

Under an average cost pricing system,
A)each class of customer would be charged the fully distributed average cost of the type of service they are purchasing.
B)each customer would be charged a different price.
C)both a and b.
D)neither a nor b.
6

The ideal price setting target for economic efficiency is one where:
A)each customer is charged the fully distributed average cost of the product they are purchasing.
B)P=MC.
C)each customer is charged a two-part tariff.
D)all of the above.
7

A pricing scheme in which the firm charges a fixed fee to cover the overhead costs and then adds a variable cost to cover the marginal cost is called:
A)average cost pricing.
B)a two-part tariff.
C)marginal cost pricing.
D)none of the above.
8

Over the last thirty years, regulation has _______ in markets like the airline industry and telecommunications.
A)increased
B)decreased
C)stayed the same
D)been eliminated
9

Which of the following is not an antitrust law?
A)Sherman Act (1890)
B)Clayton Act (1914)
C)Federal Trade Commission Act (1914)
D)None of the above.
10

Which of the following is not limited by antitrust laws?
A)predatory pricing
B)tying contracts
C)price discrimination
D)dumping
11

Which of the following is a merger in which companies in the same industry combine?
A)horizontal merger
B)vertical merger
C)conglomerate merger
D)none of the above
12

Which of the following is a merger that occurs when two firms at different stages of the production process combine?
A)horizontal merger
B)vertical merger
C)conglomerate merger
D)none of the above
13

Which of the following is a merger that occurs when two unrelated businesses combine?
A)horizontal merger
B)vertical merger
C)conglomerate merger
D)none of the above
14

Which of the following is a reason why antitrust cases have been less prevalent in recent years?
A)increased import competition
B)more price setting by government
C)less interest in anything to do with the economy
D)economists think that monopolies are a really good thing





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