Which of the following is consistent with the ideas underlying the rule of reason legal doctrine, that was established by the U.S. Supreme Court (in the case of U.S. Steel in 1920)?
a. Mere size is not an antitrust offense, because some firms may acquire a large size and monopoly position by being particularly efficient at delivering high-quality products at low prices.
b. In addition to a monopoly market structure, the crime of monopolization requires evidence of foreign government involvement.
c. The actions of monopoly market structures are legal, even if the firms in the market manage to earn unreasonable profits.
d. Every contract or combination in restraint of trade is illegal.
a
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Use the following graph to answer the next question.
If the economy is currently in equilibrium at output level Q2, but full-employment output is at level Q1, which of the following fiscal policy actions would be the most effective at bringing the economy back to its full-employment output level?
A. Increase taxes and increase government purchases. B. Reduce government purchases and cut taxes. C. Cut taxes. D. Increase taxes.
The figure above represents the behavior of total revenue as price falls along a straight-line demand curve. What is the price elasticity of demand if total revenue is given by point f?
A) Demand is inelastic. B) Demand is unit elastic. C) Demand is elastic. D) It is impossible to determine.
Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books and supplies. If Alex becomes a full-time student, then:
A. Alex has no incentive to study hard while at State U. B. the opportunity cost of attending State U. includes the sum of the benefits Alex would had from attending each of the other schools to which he was admitted. C. the opportunity cost of attending State U. includes the money Alex could have earned working for four years. D. attending State U. for four years is costless for Alex.
The task of economic regulation is to:
a. protect monopoly profits.
b. approximate the results of the competitive market.
c. replace competition with government ownership.
d. ensure laissez faire.
e. increase competition within the market.