Fish Economics Test, Chapters 9-11

25 Questions | Total Attempts: 17

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Economics Quizzes & Trivia

This test covers From Perfect Competition to Monopoly, Antitrust and Competition Policy, Regulation and Deregulation and the SMG.


Questions and Answers
  • 1. 
    Perfect competition exists when
    • A. 

      a single seller has all or most of the sales in a given market

    • B. 

      A small number of large firms have most or all of the sales in a given market

    • C. 

      Many small firms compete by selling differentiated products

    • D. 

      Many small firms are making nearly identical products

    • E. 

      B & d above

  • 2. 
    What is true of monopolies?
    • A. 

      A monopoly can arise if small firms merge together or if they disagree about acting together in their pricing and output decisions.

    • B. 

      A monopoly occurs when a single seller has all or most of the sales in a given market.

    • C. 

      A monopoly exists when a small number of large firms have most or all of the sales in a given market.

    • D. 

      A monopoly occurs when a manufacturer requires that the dealer sell only its products and none of its competitors' products.

  • 3. 
    Check all of the types of competition in the spectrum of competition which involve industries in the economy.
    • A. 

      Oligopoly

    • B. 

      Monopoly

    • C. 

      Profit-seeking

    • D. 

      Partnerships

    • E. 

      Perfect competition

    • F. 

      Price-takers

    • G. 

      Monopolistic competition

    • H. 

      Independent firms

  • 4. 
    Adam Smith wrote about the "invisible hand."
    • A. 

      True

    • B. 

      False

  • 5. 
    What are the two agencies in the United States that carry out antitrust and competition policy?
    • A. 

      Environmental Protection Agency

    • B. 

      United Nations

    • C. 

      Council of Economic Advisors

    • D. 

      Federal Trade Commission

    • E. 

      Federal Trade Committee

    • F. 

      United States Department of Treasury

    • G. 

      The U.S. Department of Justice

    • H. 

      U.S. Department of Health and Human Services

    • I. 

      Office of Homeland Security

  • 6. 
    When does the Federal government review a merger or acquisition?
    • A. 

      When a merger involves a firm that does more than $100 million in sales annually.

    • B. 

      When a merger involves a firm that does more than $100 billion in sales annually.

    • C. 

      When a merger involves a firm that does more that $100 million in sales quarterly.

    • D. 

      When a merger involves a firm that disagrees with the national health care act.

    • E. 

      When a merger involves a firm that belongs to the Republican party.

  • 7. 
    If the United States has a free market economy, and firms are allowed to make their own choices, why/when would we want the government to step in?  (Check only one.)
    • A. 

      If firms seek to make choices that will encourage competiton and lower costs for consumers

    • B. 

      If firms can't agree to act together to raise prices

    • C. 

      If many small firms make nearly identical products

    • D. 

      If competitors become enemies and customers become friends

    • E. 

      If firms seek to make choices that will limit competition and impose costs on consumers

  • 8. 
    Obamacare seeks to make choices that will limit competition and impose costs on consumers.
    • A. 

      True

    • B. 

      False

  • 9. 
    What does Professor Taylor say could be the slogan of cartels everywhere?
    • A. 

      Trade-offs are serious.

    • B. 

      Government is your friend; and a round of applause for all those lawyers.

    • C. 

      We've already determined what you are, now we are just bargaining on the price.

    • D. 

      Our competitors are our friends; our customers are the enemy.

  • 10. 
    A variety of restrictive business practices may limit competition and bring action from the FTC.  What are they?
    • A. 

      Predatory pricing

    • B. 

      Exclusive dealing

    • C. 

      Selling stocks

    • D. 

      Price taking

    • E. 

      Price maintenance agreements

    • F. 

      Tie-in-tie sales

    • G. 

      Cost-plus regulation

  • 11. 
    Those industries where competition may not seem to work well all involve _______________s, and they tend to have high fixed costs of building the __________________, and relatively lower costs of running the __________________.   (The same word completes all three blanks.)
  • 12. 
    Society has various options for regulating an industry in which competion does not seem to work very well or a natural monopoly exists.  What are they?
    • A. 

      Deregulation

    • B. 

      Predatory pricing

    • C. 

      Price-cap regulation

    • D. 

      Cost-plus regulaton

    • E. 

      Boycott the product or service

  • 13. 
    The "Stockholm Syndrome" is the discomfort one gets from playing the stock market.
    • A. 

      True

    • B. 

      False

  • 14. 
    What is a natural monopoly?
    • A. 

      When regulators start believing that their job is to protect industry profits and industry workers, rather than to protect competition and consumers.

    • B. 

      When many small firms are making nearly identical products.

    • C. 

      A situation that exists as a result of the hgh fixed or start-up costs of operating a business in a particular industry.

    • D. 

      When you naturally land on and purchase Boardwalk and Parkplace on your first and second turns.

  • 15. 
    Check the trade-offs of deregulation.
    • A. 

      Consumers paying higher prices

    • B. 

      Tie-in-tie sales

    • C. 

      Bipartisan cooperation

    • D. 

      Business environment becomes less stable for the firms and workers in formerly regulate industries

    • E. 

      Salaries fall

    • F. 

      Number of jobs in the industry increase

    • G. 

      Lay-offs occur

    • H. 

      Price-cap regulation

    • I. 

      Stockholm Syndrome

  • 16. 
    Who appoints the regulators?  Why is this significant?
  • 17. 
    With rapidly evolving technology, it's often better to encourage _______________________, rather than for government to anoint one technology and then deregulate it.
    • A. 

      Subsidies

    • B. 

      A mulitiplicity of technologies

    • C. 

      A multiplicity of regulations

    • D. 

      Monopolies

    • E. 

      Price cartels

  • 18. 
    It is not important to identify the underlying problem and design the policy response accordingly, for example, price-cap regulation for a natural monopoly.
    • A. 

      True

    • B. 

      False

  • 19. 
    In the SMG, to make a trade you just click "account holdings" and then click "transaction notes."
    • A. 

      True

    • B. 

      False

  • 20. 
    When you play the stock market, it is important to remember to "buy _________, and sell __________." (Two different words.)
  • 21. 
    You can buy mutual funds and bonds in the SMG.
    • A. 

      True

    • B. 

      False

  • 22. 
    A beta of greater than 1 indicates that the security's price will be more volatile than the market.
    • A. 

      True

    • B. 

      False

  • 23. 
    In the stock market, what are blue chips?
    • A. 

      Stocks that have turned "blue" from sitting so long at the same price

    • B. 

      More shares created at at lower price per share

    • C. 

      A blue seal on a bond certificate

    • D. 

      The stocks of the largest, most consistently profitable corporations

  • 24. 
    What are junk bonds?
    • A. 

      Any bond rated Baa or higher by Moody's, or BBB or higher by Standard and Poor's

    • B. 

      The lowest rated corporate and municipal bonds

    • C. 

      A downgraded bond

    • D. 

      A bond you throw in the junk drawer for twelve years and then cash in when you graduate high school

  • 25. 
    Please write your name here.  Also write your account holdings and your current total equity, at the time of taking this test in the SMG.  Also, pick one of your investments or trades, and explain why you made this choice.  (5 points)