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181 Cards in this Set

  • Front
  • Back
The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of
a market system
Vertical merger involves a combination of two or more firms
operating at different stages of the production process in a particular industry
Which combination of fiscal policy actions would most stimulate an economy in a deep recession?
Decrease taxes and increase government spending
In a capitalistic economy
there is a reliance on the market
The combination of fiscal policies that would reinforce each other and be most expansionary would be a
increase in government spending and a decrease in taxes
Which of the following pieces of legislation outlawed mergers that substantially lessen competition and tend to create monopoly?
The Clayton Act
Which statement best describes a capitalist economy?
The production and allocation of goods and services is determined primarily through markets
Which would not be characteristic of a capitalist economy?
Government ownership of the factors of production
In which industry is monopolistic competition most likely to be found?
Retail trade
The basic purpose of antitrust laws in the US is to
limit monopoly power and enhance competition
The dollar votes of consumers ultimately determine the composition of output and the allocation of resources in a market economy. This statement best describes the concept of
consumer sovereignty
The market system is an economic system that
gives private individuals and institutions the right to own resources used in production
The term dollar votes means
consumers "vote" for certain products to be produced by how they spend their incomes
The perceived abuses by monopoly railroads, banks, coal, sugar, meat and other trust in the US during the 1870's and 1880's led directly to the passage of the
Sherman Act
The term consumer sovereignty means that
what is produced is ultimately determined by what consumers buy
The "rule of reason" approach to antitrust
held that some monopolies could be good monopolies
Capitalism is an economic system that
gives private individuals and corporations the right to own productive resources
The antitrust laws in the US are based on the
idea that competition leads to greater economic efficiency than does monopoly
The market system is said to be characterized by "consumer sovereignty." This is because
of the role of consumers in determining what good are produced
A major feature of a market system is that
there is consumer sovereignty
The market system is characterized by
private ownership of the means of production
The introduction in 1996 of "Arch Deluxe" was a hit product for McDonald's. This example shows that in the market for such fast-food products
the dollar votes of consumers determined which products are successes
Firms that control all aspects of the production of an output from raw materials to retail sales are
vertically integrated monopolies
Which is a major feature of the market system?
the right to own private property and control resource use
Among the characteristics of pure capitalism is
private ownership of the means of production
Which is characteristic of the market system?
free enterprise and choice
Suppose Haagen-Dazs Ice Cream acquires Ben & Jerry's Ice Cream. The Haagen-Dazs Ice Cream company is practicing
horizontal integration
A high concentration ratio in an industry indicates that
few firms produce most of the industry's output
By free enterprise, we mean that
individuals may obtain resources, organize production, and sell the resulting output in any legal way they choose
A low concentration ratio in an industry means that
each firm in the industry accounts for a small market share
The percentage of total industry sales or accounted for by the top 4 largest firms provides the basis for calculating the
industry's concentration ratio (C/R)
Which statement is correct?
Freedom of choice and enterprise are essential elements of the market system
Firms operating numerous plants that produce the same goods / services are
horizontally integrated
All accurately describe a market economy except
government establishes maximum and minimum price for most goods and services
The Sherman Antitrust Act
prohibits both monopolization and attempts to monopolize
In 1997, McDonald's introduced the "55-cent special." It turned out to be an unsuccessful product. In the marketplace for fast-food products, this lack of success would be an example of
consumer sovereignty
The most dominant type of product market structure in the US economy is
oligopoly
A merger of Coca Cola Company and General Motors Corporation would be
conglomerate merger
The Clayton Act of 1914
outlawed price discrimination, tying contracts, intercorporate stockholding and interlocking directories that lessen competition
Which one of the following does the original Clayton Act NOT prohibit?
the purchase of the assets of rival firms that lessens competition
Which of the following is directly illegal under the Sherman Act?
tying contracts and price fixing
The ABC Company can hire either union or nonunion workers. Any nonunion workers who are hired must join the union after 30 days or forfeit their jobs. ABC Company has a
union shop
Collective bargaining occurs under a framework of rules established in the
National Labor Relations Act
The function of the National Lab Relations Board is to
investigate and rule on charges of unfair labor practices by either management or unions
According to Marxism, surplus value is
the difference between the value of a worker's output and the amount the capitalist pays the worker
In Marxian ideology surplus value is basically
capitalist profits resulting from the exploitation of labor
The labor theory of value suggests that
all economic value or exchange value is derived from the productive efforts of labor (working class or the proletariat)
The belief that the economic value of a commodity is determined solely by the amount of labor time required for its production refers to the
labor theory of value
Natural monopolies exist because of
economies of scale
According to the "rule of reason doctrine" some restraints of trade are permitted
only contracts and combinations which "unreasonably" restrain trade violate the antitrust laws
The idea of scientific socialism is associated with the
Marxian Socialism
Among the characteristics of laissez faire capitalism are
private ownership of the means of production
The US Antitrust laws are based on the
idea that competition leads to greater economic efficiency than monopoly
A major shortcoming of the Sherman Act was that
it did not explicitly state which activities were illegal
Which of the following did the Norris-LaGuardia Act outlaw?
yellow-dog contract
The belief that profits of capitalists arise from the exploitation of labor is
a key proposition in Marxian economics
Syndicalism
exists when an economy is controlled by trade unions
All the different groups of socialism have certain common beliefs. Among these beliefs were
public ownership of the means of production
Among the socialist's reformers, which of the following advocated for peaceful reformation of society?
Fabians
The formation of phalanxes as a way of reforming society was the idea of which of the following socialists?
Utopian Socialists
The National Labor Relations Board was established by the
Wagner Act
The Fair Labor Standard Act established which of the following
minimum wage and maximum hour per work week
Among other provisions, the Sherman Act was designed to
make monopolies and acts which restrain trade illegal
Which of the following did the Taft-Hartley Act outlaw?
closed shop
Federal legislation intended to reduce corruption in labor unions is included in the
Landrum-Griffin Act
Fiscal policy in the United States is carried out primarily by
Federal Government
Monetary policy in the United States is carried out primarily by
The Federal Reserve System
The Robinson-Patman Act prohibits
unwarranted discounts to large purchasers
The only antitrust law that explicitly protects small firms is
Robinson-Patman Act
The first Federal Antitrust law passed in the United States was
The Sherman Act of 1890
A merger of the US Steel Corporation and the Marathon Oil Company formed USX Corporation. This type of merger is called
conglomerate merger
A system of patents is
a way of granting temporary monopoly power to innovators
Two major virtues of the market system are that it
allocates resources efficiently and allows economic freedom
Consumer sovereignty refers to the
idea that the decisions of producers and resource suppliers with respect to the kinds and amounts of goods produced must be appropriate to consumer demands
The Federal Reserve System was created in
1913
The function of investigating instances of fraudulent advertising has been assigned in the US to the
Federal Trade Commission
Which of the following is not a characteristic of the pure capitalistic system?
government ownership of major industries
In the US economy the money supply is controlled by the
Federal Reserve System
Which one of the following is not prohibited by the original Clayton Act?
the purchase of the assets of rival firms that lessens competition
A major function of the National Labor Relations Board is to
investigate and rule on charges of unfair labor practices by either management or unions
Tying contracts are illegal under the
Clayton Act of 1914
Which of the following prohibited mergers by stock acquisition if the effect to was lessen competition?
Clayton Act of 1914
A merger between an automobile manufacturer and a maker of automobile tires is an example of a
vertical merger
Which of the following amended the Clayton Act's prohibition against merger that substantially lessen competition?
Celler-Kefauver Act of 1950
Tying agreements
obligate a purchaser of product X to also buy product Y from the same seller
The Celler-Kefauver Act of 1950
prohibited any firm from acquiring the real assets of another firm where the effect was to lessen competition
Which of the following is not an antitrust law?
the Wagner Act
A merger between a maker of household detergents and a fast food chain would be an example of
a conglomerate merger
Interlocking directorates are
illegal under provisions of the Clayton Act of 1914
The US Justice Department would most likely block a merger between
Boeing and Airbus
The Landrum-Griffin Act is also known as
Labor-Management Reporting and Disclosure Act
The Wagner Act of 1935
is also known as the National Regional Labor Act
The "rule of reason" indicated that
only contracts and combinations which "unreasonably" restrain trade violates the Sherman Act
Which of the following legislations most dramatically increase union bargaining power in the US?
The Wagner Act
Which of the following prohibited firms worth $100 million or more from acquiring firms worth $10 million or more unless the Antitrust Division of the Justice Dept has been informed?
None have done this
False advertising and deceptive product packaging was specifically prohibited by
FTC Act
Under the Landrum-Griffin Act (1959) trusteeship can take place under which of the following?
to correct corruption and to correct financial malpractice
The Landrum-Griffin Act was passed because US Congress found occurring among several labor union organizations
corruption, disregard of individual rights of union members, breach of trust of union members
Which of the following was not part of the goal of the Fair Labor Standard Act of 1938?
set retirement age for all workers
Which of the following statements is false?
The Fair Labor Standard Act was passed to reduce unemployment
Which of the following were not used by the courts to suppress labor unions during the Repression phase?
The Clayton Act
Which of the following techniques was used by the American business person in dealing with labor and labor unions during the Repression phase?
paternalism, yellow-dog contract, company unions, firing of pro-union workers
The Taft-Hartley Act is also known as
Labor-management relations act
The major mechanism used in the United States to confront the problem of scarcity is
the market system, which relies on prices to direct production
Relative to most other countries, the United States has historically relied more heavily on
decentralized decision making and private resource ownership
Since World War II, the average concentration ratio for all manufacturing industries
rose sharply
Which of the following made monopoly and restraints of trade criminal offenses against the Federal government
Sherman Act of 1890
Changes in government spending and tax revenues for the purpose of achieving a full-employment and noninflationary level of domestic output is called
fiscal policy
Suppose Haagen-Dazs Ice Cream buys several large dairy farms, some sugar cane farms, and a large number of Ice cream parlors. Haagen-Dazs Ice Cream is practicing
horizontal integration
When production entails substantial economies of scale, average total costs
fall consistently across a large range of ouput
A merger of several firms operating in different industries - for example, a trucking company, a fast food chain, and a brokerage house - is called
a conglomerate merger
The K-mart Corporation operates K-Mart and Sears retail stores, provides financial services, such as the Discover card, and has a real estate division, K-Mart is an example of
a conglomerate firm
The Clayton Antitrust Act of 1914
exempted collective bargaining from antitrust litigation
The public interest theory of industrial regulation contends that
the objective of regulation is to protect the public form the market power inherent in natural monopolies
The Sherman Act outlaws "conspiracies" to
monopolize or attempt to monopolize a market
The Overnight Construction Company has just signed a collective bargaining contract in which it agrees that all workers it hires must be union member in good standing at the time they are hired. This provision reflects
a closed shop
The law most frequently condemned for protecting competitors rather than the competition is the
Robinson-Patman Act of 1936
Laws and government actions designed to prevent monopoly and promote competition are the focus of
antitrust policy
The Sherman Act
declared monopoly and restraints of trade to be illegal
State right-to-work laws
make compulsory union membership (for example, a union shop) illegal
Business combinations in the 1870s and 1880s that came to dominate an industry and assigned control to a single decision group are referred to as
trusts
Suppose that under its collective bargaining agreement the ABC Corporation can hire nonunion workers, but such workers must join the union within 30 days. This agreement embodies
a union shop
Recently, some Congressional representatives have called for extensive ergonomics regulations to reduce strains and injuries form repetitive activities by workers. Such regulation, if passed, would be a good example of
social regulation
Which are contractionary fiscal policies used in US during inflationary periods?
increased taxation and decreased government spending
Mutual interdependence means that each firm in oligopolistic industry
considers the reactions of its rivals when it determines its price policy
Firms are prohibited from entering into contracts, combinations, and conspiracies that restrain trade by
Section 1 of the Sherman Act
The XYZ Corporation's collective bargaining agreement indicates that it may hire either union or nonunion workers and that the latter are under no obligation to join the union. This agreement results from
right-to-work laws
In the US, which industry is monopolistic competition most likely to be found?
Retail trade
An example of a monopolistically competitive industry in the US would be
retail clothing
Which set best describes the basic features of monopolistic competition?
easy entry, many firms, and differentiated products
In an oligopolistic market there are
few sellers
Which product is produced in an industry that best illustrates the concept of homogeneous oligopoly?
copper
Which is an example of a differentiated oligopoly?
the beer industry
The legislation that prohibited "every contract, combination, ... or conspiracy" that limits competition is the
Sherman Act
Which piece of Federal legislation aims to prevent restraint of trade monopolization?
Sherman Act
A "mixed economy" is one characterized by
significant economic roles for both the private and public sectors
Syndicalism refers to an economic system that
is characterized by worker ownership and control of the means of production
Economic systems are classified primarily according to
who makes decisions and who owns resources
The main purpose of economic (industrial) regulation is to
lower price and force the firm to increase output
A firm is vertically integrated if it
controls multiple aspects of production of an output from raw materials to retail sales
Conglomerate mergers entail the acquiring firm absorbing another firm that
operates primarily in a different industry
Antitrust legislation is intended to limit the
monopolization of industries
If an aluminum producer also mined bauxite ore (used in aluminum production) and manufactured beer cards, it would be
vertically integrated
Which of the following is a fundamental characteristic of pure capitalism as an economic system?
property rights
The major mechanism used in the US to confront the problem of scarcity is
the market system, which relies on prices to direct production
An example of a vertical merger would be
a log cabin architecture firm merging with a logging company and a construction company
A conglomerate merger entails combining firms
from unrelated industries into a single firm
The United States "free market" system
contains elements of the free market as well as government control and regulation and involvement
Social regulation differs from industrial (economic) regulation in that
social regulation applies to virtually all industries, while industrial regulation applies to a restricted number
Pure capitalism is characterized by
private property and laissez-faire government policies
Which of the following is not an example of horizontal integration?
McDonalds acquires Ore-Ida farms to more directly control potato production
The rule of reason indicated that
only contracts and combinations that unreasonably restrain trade violate the antitrust laws
The "conspiracy doctrine" in the Sherman Act was invoked against trade union during 1890-1913 on the grounds that unions
conspired to monopolize the sale of labor
The Clayton Antitrust Act
outlawed interlocking directories
The antitrust act that forbade major firms from acquiring either the stock or the assets of major competitors was the
Celler-Kefauver Act of 1950
The Hegelian dialectics follows in this sequence
thesis, antithesis, synthesis
The Supreme Court's attempts to distinguish between good and bad trusts were central to the
rule of reason approach to antitrust
If Southwest Airlines acquired United Airlines, this acquisition would be a
horizontal merger
In Marxist jargon, capitalists are also known as the
protagonists
Two fundamental characteristics of pure capitalism are
private property and laissez-faire policies
Market concentration ratios most directly measure the percentages of
industry sales controlled by the 4 largest domestic firms
The rule of reason approach to antitrust
held that some monopolies could be good monopolies
Responsibility for enforcing the antitrust laws rests
with both the Department of Justice and the Federal Trade Commission
The Federal Trade Commission Act
created the Federal Trade Commission
A function of the Federal Trade Commission is to
investigate instances of faulty and misleading advertising
A vertical merger involves a combining of one or more firms
operating at different stages of the production process in a particular industry
The Celler-Kefauver Act of 1950
amended the Clayton Act
The Hart-Scott-Rodino Antitrust Improvement Act
requires corporations to notify the Justice Department 30 days before any planned merger
Prudential Insurance owns numerous skyscrapers, several large firms, and other real estate in addition to its insurance operations, and is an example of
a conglomerate
In Marxist analysis
value depends on the labor time socially necessary for production
Among the Fabian Society's goals was
nationalization of key and heavy industries
Fabian socialists differ from Utopian socialists by advocating the
nationalization of heavy industry
The Marxist term for differences between wages and the value that labor create
surplus value
Karl Marx predicted that, over time,
capital would become increasingly concentrated in the hands of few
Syndicalists, and Marxists might differ in their specific prescription for beneficial social structures, but all would agree on the wisdom and desirability of
a stable money supply
An economic system characterized by public (government) ownership of the means of production is known as
socialism
Socialism is an economic philosophy that emphasizes
public ownership of the means of production
The antitrust laws are based on the
idea that competition leads to greater economic efficiency than does monopoly
Which one of the following is concerned with social regulation?
Equal Employment Opportunity Commission
In Marxist jargon, interest, rent and profit are collectively known as
surplus values
The idea that capitalism is dynamically unstable because the quest for profit stimulates economic concentration and the immiseration of workers is central to
Marxist theory