Question 1. The Sherman Act was designed to:

1. The Sherman Act was designed to:

A) exempt commercial banks from the antitrust laws.

B) make interlocking directorates legal.

C) prohibit misleading and antisocial advertising.

D) make monopoly and acts that restrain trade illegal.

2. The Clayton Act of 1914:

A) outlawed price discrimination, tying contracts, intercorporate stockholding, and interlocking directorates that lessen competition.

B) prohibited unfair or deceptive acts or practices in commerce that tend to reduce competition.

C) outlawed vertical and conglomerate mergers.

D) prohibited one firm from acquiring the assets of another when the effect was to limit competition.

3. False advertising and the misrepresentation of products were made illegal by the:

A) Federal Trade Commission Act.

B) Wheeler-Lea Act.

C) Sherman Act.

D) Clayton Act.

4. The Celler-Kefauver Act of 1950:

A) outlawed price fixing.

B) amended the Sherman Act.

C) amended the Clayton Act.

D) created the Civil Aeronautics Board (CAB).

5. The basic issue in the DuPont cellophane case was:

A) whether trade crossed state lines.

B) defining the relevant market.

C) structure versus behavior.

D) the rule of reason.

6. Restructuring of a major industry resulted from the:

A) U.S. Steel case.

B) AT&T case.

C) IBM case.

D) DuPont cellophane case.

7. Which one of the following is most likely to increase the Herfindahl index of a particular industry?

A) a conglomerate merger

B) a vertical merger

C) a price fixing arrangement among all the industry firms

D) a horizontal merger

8. Critics of the regulation of natural monopolies contend that:

A) regulation increases the incentive of firms to lower costs.

B) regulated firms may use creative accounting to reduce costs, prices, and profits.

C) when rates of return are based on the value of real capital, an uneconomic substitution of labor for capital may occur.

D) the industry may “capture” or control the regulatory commission.

9. The latest industry to begin the deregulation process is the:

A) trucking industry.

B) airlines industry.

C) electricity industry.

D) railroad industry.

10. Social, as distinct from industrial, regulation is the major focus of the:

A) Federal Trade Commission

B) Federal Energy Regulatory Commission.

C) Federal Communications Commission.

D) Consumer Products Safety Commission.

11. Defenders of social regulation point out that:

A) social regulation is a better alternative than unregulated natural monopoly.

B) critics who stress the high administrative and compliance costs of social regulation underestimate the social benefits that the regulations produce.

C) the number of regulatory agencies has declined over the past two decades.

D) social regulations reduce product prices.

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