A Manager's Guide to Government in the Marketplace

In the case of the Nestlé and Ralston Purina merger, the FTC alleged that the postmerger Herfindahl-Hirschman Index (HHI) for the dry cat food market would be over 2,400. According to the Horizontal Merger Guidelines discussed in the chapter, how is a market with an HHI of 2,400 classified?

The chapter discusses four primary reasons for market failure. Which of the following is NOT listed as one of these four reasons?

According to the 1970 amendment to the Sherman Antitrust Act, what is the maximum fine for a corporation found guilty under Section 1 for engaging in a conspiracy in restraint of trade?

The 'rule of reason' established in the Standard Oil case provides the code of decision making for antitrust cases. What does this rule effectively stipulate?

If a government successfully regulates a monopolist's price at the socially efficient level, what is the impact on the deadweight loss of monopoly?

What is a negative externality?

The Clean Air Act of 1970 uses the market as an enforcement mechanism. How does it cause firms to internalize the cost of emitting pollutants?

What is the 'free-rider problem' associated with public goods?

What is the purpose of laws against insider trading in the stock market?

How does the Truth in Lending Simplification Act (TLSA) attempt to correct for incomplete information in the loan market?

What is rent seeking?

What is the difference between a quota and a tariff?

How does a lump-sum tariff affect a foreign firm's marginal cost curve?

In the demonstration problem on page 521, what is the socially efficient level of output for steel?

How did Nestlé and Ralston Purina ultimately gain conditional approval for their merger from the FTC?

What is the primary effect of an excise tariff on foreign producers' supply curve in the domestic market?

When the government regulates a monopolist's price below the socially efficient level (e.g., at P* in Figure 14-3), what is a likely outcome in the market?

What does the Lanham Act primarily prohibit?

In the demonstration problem on page 523, three individuals have an identical inverse demand for streetlights of P = 30 - Q. If the marginal cost of a streetlight is $54, what is the socially efficient quantity of streetlights?

Under the Horizontal Merger Guidelines, a market with a post-merger HHI of 1,500 would be considered:

What is the primary economic reason that a government might allow a monopoly to exist but choose to regulate its price?

Why does the government's ability to enforce contracts help solve the 'end-of-period' problem?

Based on the demonstration problem on page 534, if a quota of 10 units is imposed on foreign supply, what is the new equilibrium price in the domestic market?

In Figure 14-4, if the government regulates the price at PC, what will happen to the monopolist in the long run?

Which U.S. law, in concert with the Clayton Act, allows a firm harmed by a competitor's deceptive advertising to sue for treble damages?