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| 1 | |
Which is part of the case against industrial concentration? Industrial concentration |
| | A) | leads to income equality |
| | B) | results in lower per unit costs |
| | C) | is greater than it needs to be to achieve economies of scale |
| | D) | produces economic profits that are used for research and technological development |
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| 2 | |
If a pulp and paper manufacturer merges with a food producer, this is an example of... |
| | A) | a conglomerate merger |
| | B) | a horizontal merger |
| | C) | a vertical merger |
| | D) | industrial concentration |
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| 3 | |
In Canada in 1986, the 1910 Combines Investigation Act was replaced by |
| | A) | the Anti-Combines Act |
| | B) | the Monopoly Investigation Act |
| | C) | the Competition Act |
| | D) | the Anti-Trust Act |
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| 4 | |
The government is less likely to oppose vertical mergers because |
| | A) | economies of scale are not as great as with horizontal mergers |
| | B) | they are not likely to lessen competition in either of the two markets |
| | C) | they typically have higher average costs |
| | D) | they are easier to regulate |
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| 5 | |
Suppose that the economies of scale in the shipbuilding industry are so great that a single large firm can supply the entire market at a lower cost than two or three smaller suppliers can. This is an example of |
| | A) | vertical integration |
| | B) | monopoly power |
| | C) | social regulation |
| | D) | a natural monopoly |
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| 6 | |
Which of the following is not allowed under the Competition Act? |
| | A) | price fixing |
| | B) | price discrimination |
| | C) | natural monopoly |
| | D) | competitive bids on government contracts |
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| 7 | |
One criticism of industrial regulation is that it may |
| | A) | increase exports |
| | B) | reduce incentives to be efficient |
| | C) | reduce imports |
| | D) | encourage excessive competition, driving firms out of business |
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| 8 | |
The legal cartel theory of regulation |
| | A) | would allow the forces of demand and supply to determine the rate (prices) of the good or service |
| | B) | would attempt to protect the public from abuses of monopoly power |
| | C) | assumes that the regulated firms want the regulations in order to protect them from competition |
| | D) | assumes that both the demand for and supply of the good or service produced by the regulated industry are perfectly inelastic |
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| 9 | |
The overall effect of deregulation in Canadian industry over the past decades has been |
| | A) | higher prices, higher costs, and decreased output |
| | B) | higher prices and costs, but increased output |
| | C) | lower prices and costs, but decreased output |
| | D) | lower prices, lower costs, and increased output |
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| 10 | |
The theory that industrial regulation of natural monopolies is necessary to prevent abuses is called |
| | A) | the public interest theory of regulation |
| | B) | social regulation |
| | C) | the anticompetition theory |
| | D) | the legal cartel theory of regulation |
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| 11 | |
Occupational licensing, such as that in dentistry and hairstyling, is an example of |
| | A) | a natural monopoly |
| | B) | a regulated monopoly |
| | C) | a legal cartel |
| | D) | an oligopoly |
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| 12 | |
Social regulation is concerned with |
| | A) | an equitable distribution of wealth throughout society |
| | B) | the conditions under which goods are produced, and their impact on society |
| | C) | the impact of social changes on the production process |
| | D) | the most efficient use of resources within a society |
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| 13 | |
Supporters of social regulation contend that |
| | A) | there is a pressing need to reduce the number of mergers in U.S. business |
| | B) | the presence of natural monopolies requires strong regulatory action by government |
| | C) | the social benefits of regulation will over time exceed the social costs |
| | D) | administrative and compliance costs are often exaggerated |
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| 14 | |
Which of the following has been argued as a negative impact of social regulation? |
| | A) | in order to comply with such regulations, firms pay higher costs, which they pass on to consumers in the form of higher prices |
| | B) | fear of being unable to meet some social regulations may interfere with a firm's innovation |
| | C) | smaller firms are less able to absorb the cost of complying with such regulations. Thus, they may be forced out of business, leaving only larger firms and reducing competitiveness. |
| | D) | all of the above |
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| 15 | |
Which of the following is not a difference between industrial regulation and social regulation? |
| | A) | social regulation applies to more firms than industrial regulation. |
| | B) | social regulation seeks to protect consumers, while industrial regulation does not. |
| | C) | social regulation has expanded rapidly, while industrial regulation has declined. |
| | D) | social regulation is more intrusive during day-to-day production than is industrial regulation. |
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