Question

[19] A natural monopoly is a market situation where:

A) entry is prohibited by government decree.

B) one seller has control of a key patent that lowers production costs.

C) one firm is the sole owner of natural resources required for production.

D) it is more efficient to have the entire output produced by a single firm than by several firms.

[20] A monopolist's demand curve for its product is:

A) a kinked demand curve.

B) perfectly horizontal at the equilibrium market price.

C) the same as the market demand curve for the product.

D) downward sloping, but different from the market demand curve for the product.

[21] The primary purpose of the U.S. antitrust laws is to:

A) regulate natural monopolies.

B) ensure that businesses earn only reasonable rates of profit.

C) promote the operation of market forces and limit practices that injure competition.

D) protect consumers from false and misleading advertising and product claims by businesses.

[22] Combinations and conspiracies in restraint of trade are:

A) best illustrated by mergers.

B) best illustrated by trade associations.

C) any practices designed to reduce competition.

D) practices carried out by two or more firms designed to reduce competition.

[23] An antitrust suit can be brought against a firm by:

A) another firm.

B) a state government.

C) the U.S. government.

D) all of the above.

[24] Which of the following is condemned by the Sherman Act?

A) Vertical integration in a market.

B) Having a monopoly in a market.

C) Horizontal integration in a market.

D) Attempting to monopolize a market.

Answer 1

19. A natural monopoly is a market situation where:

b) one firm has control of a key patent that lowers production costs.

Monopoly is a situation in the market where there is one main seller who has the authority, which gives low cost of production. Mainly it is in the sector where there is high investment or infrastructure needed.

20. A monopolist's demand curve for its product is:

c) same as the market demand curve for the product
Monopolists demand curve will be the same as the market demand curve for that product because he is the only seller in the market and his demand curve will match as the market.

21. The primary purpose of the U.S. antitrust laws is to:

d) protect consumers from false and misleading advertising and product claims by businesses

There are chances that the companies and firms may mislead the consumers and show them a wrong picture of the business. Thus, antitrust laws were created to protect consumers interests and save them from false promises.

22.Combinations and conspiracies in restraint of trade are:

d) practices carried out by two or more firms designed to reduce competition

The combination and conspiracies are designed to resolve issues between seller and buyer so in restraint of trade it is for the two or more firms.

23.An antitrust suit can be brought against a firm by:

d) all of the above

The enforcement of the antitrust laws in done primarily by three levels i.e, the federal government (US govt.), the private parties (another firm) and the government of other states.

24.Which of the following is condemned by the Sherman Act?

d) attempting to monopolise a market

There were more and more mergers happening and this lead to less competition. Sherman act was passed to make difficult for business mergers and allow more monopolies to happen.