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Exam 8: Government and Markets

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Question 41

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Industries have been made subject to economic regulations for all the following reasons except

A) large economies of scale
B) fear of destructive competition
C) extending the scope of service
D) corruption of government officials

E) All of the above
F) A) and B)

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Question 42

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During the 1970s, the federal government initiated steps to dismantle economic regulations in industries where they had outlived their usefulness-telecommunications, railroads, energy, airlines, and trucking.

A) True
B) False

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Question 43

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Because of the free-rider problem, government is looked upon to provide public goods through the use of tax financing.

Under a system of peak-load pricing, customers are charged more for using electricity during the off-peak hours.

Opponents of using taxpayer dollars to pay for new stadiums say all of the following except

According to the ______, every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor.

Among the sources of market failure are competitive markets, private goods, and economic equality.

To help clear the skies of acid rain, the U.S. government allows the trading of emission certificates. If the price of a certificate is $25,000, then acid rain will be decreased by companies that can do so at a cost of

Command-and-control regulations impose restrictions on the amount of a polluting activity that is allowed to occur.

According to the fair-return principle of regulation, a firm can charge a price high enough to allow it to realize an economic profit.

Figure 7.1 Market Failure -Refer to Figure 7.1. The market failure depicted is

Among the business practices outlawed by the Clayton Act are interlocking directorates, price discrimination, mergers, and tying contracts that substantially lessen competition.

To control the wages, prices, conditions of entry, and standards of service in a particular industry, the government has used

The Environmental Protection Agency, Consumer Production Safety Commission, and Occupational Safety and Health Administration are government agencies that engage in social regulation.

Which of the following is not a potential violation of the Clayton Act?

Critics of the North American Free Trade Agreement have maintained that because environmental regulations in the United States are more stringent than those in Mexico, the competitiveness of U.S. firms may suffer.

______ tends to reduce the incentives for public utilities to contain costs, because the firm realizes essentially the same profits regardless of its efforts.

When the production of a good entails spillover costs, too little of a good is produced and there is an under-allocation of resources to its use.

Public goods, such as lighthouses and highways, are produced and sold easily in small units and are not subject to the principle of rival consumption.

In 2002, the top 5 firms in which industry agreed to pay consumers back for price-fixing offenses they committed between 1995 and 2000?