BUS 404 Midterm 2. A+ Graded (Errorless
answers 100%)
T/F: The government intervenes to thwart anticompetitive behaviors throughout
the marketplace - ANSWER-True
T/F: A natural monopoly exists where a single large firm, such as a utility, is more
efficient than several small ones - ANSWER-True
T/F: When all the costs and benefits of a good or service are fully internalized or
absorbed by producers or consumers, those costs or benefits fall elsewhere as
externalities - ANSWER-False
T/F: Negative externalities are those in which a decision maker does not receive
the full benefit of a deicion - ANSWER-False
T/F: The Supremacy Clause of the U.S. Constitution broadly specifies the power
accorded to the federal government to regulate business activity -
ANSWER-False
T/F: Optimal efficiency often demands one uniform federal rule rather than a
patchwork of 50 state rules - ANSWER-True
T/F: The U.S. Constitution does not expressly forbid state regulation of interstate
commerce - ANSWER-True
T/F: Police power refers to the right of the state governments to promote the
public health, safety, morals, and general welfare - ANSWER-True
T/F: Purely intrastate activities can be regulated by the federal government if they
have a substantial effect on the interstate commerce - ANSWER-True
T/F:The Commerce Clause, as interpreted by the judiciary, affords private
companies exclusive discretion over foreign commerce - ANSWER-False
,Which of the following would most likely be considered a negative externality for
a manufacturing firm?
a. Internal disagreements among the firm's employees
b. Unfavorable public opinion about the firm's products
c. Air and water pollution as a result of the firm's manufacturing processes
d. Government regulations detrimental to the firm's manufacturing activities -
ANSWER-c. Air and water pollution as a result of the firm's manufacturing
processes
When all the costs and benefits of a good or service are not fully internalized or
absorbed, those costs or benefits fall elsewhere as what economists have
labeled ____.
a. public goods
b. neighborhood effects
c. commodization
d. imperfect information - ANSWER-b. neighborhood effects
Today, attention in the monopoly area is largely direct to:
a. preventing negative externalities
b. curving anticompetitive conduct
c. controlling the formation of cartels
d. regulating open competition - ANSWER-b. curving anticompetitive conduct
Which of the following statements is true of public goods?
a. The added cost of benefiting one person is zero or nearly so
b. There are methods for excluding those who choose not to pay for public goods
c. They will be produced in adequate quantities in the absence of government
regulations
d. They can be provided to consumers through a pricing system - ANSWER-a.
The added cost of benefiting one person is zero or nearly so
Which of the following acts forbids the use, cultivation, or possession of
marijuana for any purpose?
a. The Harrison Narcotics Tax Act
b. The Controlled Substances Act
c. The Food, Drug, and Cosmetic Act
, d. The Pure Food and Drug Act - ANSWER-b. The Controlled Substances Act
Which of the following ended Prohibition in 1933 and gave the states broad
authority to regulate the sale of alcohol?
a. The Twenty-First Amendment
b. The Commerce Clause
c. The Fifth Amendment
d. The Supremacy Clause - ANSWER-a. The Twenty-First Amendment
Which of the following is an example of the federal government exceeding its
authority in regulating commerce?
a. Regulating railroad routes and rates
b. Prohibiting indecent materials on regular broadcast television between 6am
and 10pm
c. Forcing most Americans to maintain "minimum essential" health insurance
d. Specifying standards of safety and health in industry - ANSWER-c. Forcing
most Americans to maintain "minimum essential" health insurance
Which of the following statements is true of licensure?
a. It is lauded for having benefits that exceed its cost in increased prices
b. It is issued to increase services and decrease administrative expenses
c. It is criticized as being designed to block the entry of competitors
d. It is used by the federal government to intervene in busienss - ANSWER-c. It
is criticized as being designed to block the entry of competitors
Which of the following was the first federal regulatory agency that Congress
established
in 1887 for the purpose of regulating railroad routes and rates?
A. The Federal Trade Commission
B. The Interstate Commerce Commission
C. The Environmental Protection Agency
D. The Food and Drug Administration - ANSWER-B. The Interstate Commerce
Commission
Which of the following statements is true of independent federal agencies?
A. They are usually the departments of the government's executive branch.
B. They are created via statutes labeled enabling legislation.
answers 100%)
T/F: The government intervenes to thwart anticompetitive behaviors throughout
the marketplace - ANSWER-True
T/F: A natural monopoly exists where a single large firm, such as a utility, is more
efficient than several small ones - ANSWER-True
T/F: When all the costs and benefits of a good or service are fully internalized or
absorbed by producers or consumers, those costs or benefits fall elsewhere as
externalities - ANSWER-False
T/F: Negative externalities are those in which a decision maker does not receive
the full benefit of a deicion - ANSWER-False
T/F: The Supremacy Clause of the U.S. Constitution broadly specifies the power
accorded to the federal government to regulate business activity -
ANSWER-False
T/F: Optimal efficiency often demands one uniform federal rule rather than a
patchwork of 50 state rules - ANSWER-True
T/F: The U.S. Constitution does not expressly forbid state regulation of interstate
commerce - ANSWER-True
T/F: Police power refers to the right of the state governments to promote the
public health, safety, morals, and general welfare - ANSWER-True
T/F: Purely intrastate activities can be regulated by the federal government if they
have a substantial effect on the interstate commerce - ANSWER-True
T/F:The Commerce Clause, as interpreted by the judiciary, affords private
companies exclusive discretion over foreign commerce - ANSWER-False
,Which of the following would most likely be considered a negative externality for
a manufacturing firm?
a. Internal disagreements among the firm's employees
b. Unfavorable public opinion about the firm's products
c. Air and water pollution as a result of the firm's manufacturing processes
d. Government regulations detrimental to the firm's manufacturing activities -
ANSWER-c. Air and water pollution as a result of the firm's manufacturing
processes
When all the costs and benefits of a good or service are not fully internalized or
absorbed, those costs or benefits fall elsewhere as what economists have
labeled ____.
a. public goods
b. neighborhood effects
c. commodization
d. imperfect information - ANSWER-b. neighborhood effects
Today, attention in the monopoly area is largely direct to:
a. preventing negative externalities
b. curving anticompetitive conduct
c. controlling the formation of cartels
d. regulating open competition - ANSWER-b. curving anticompetitive conduct
Which of the following statements is true of public goods?
a. The added cost of benefiting one person is zero or nearly so
b. There are methods for excluding those who choose not to pay for public goods
c. They will be produced in adequate quantities in the absence of government
regulations
d. They can be provided to consumers through a pricing system - ANSWER-a.
The added cost of benefiting one person is zero or nearly so
Which of the following acts forbids the use, cultivation, or possession of
marijuana for any purpose?
a. The Harrison Narcotics Tax Act
b. The Controlled Substances Act
c. The Food, Drug, and Cosmetic Act
, d. The Pure Food and Drug Act - ANSWER-b. The Controlled Substances Act
Which of the following ended Prohibition in 1933 and gave the states broad
authority to regulate the sale of alcohol?
a. The Twenty-First Amendment
b. The Commerce Clause
c. The Fifth Amendment
d. The Supremacy Clause - ANSWER-a. The Twenty-First Amendment
Which of the following is an example of the federal government exceeding its
authority in regulating commerce?
a. Regulating railroad routes and rates
b. Prohibiting indecent materials on regular broadcast television between 6am
and 10pm
c. Forcing most Americans to maintain "minimum essential" health insurance
d. Specifying standards of safety and health in industry - ANSWER-c. Forcing
most Americans to maintain "minimum essential" health insurance
Which of the following statements is true of licensure?
a. It is lauded for having benefits that exceed its cost in increased prices
b. It is issued to increase services and decrease administrative expenses
c. It is criticized as being designed to block the entry of competitors
d. It is used by the federal government to intervene in busienss - ANSWER-c. It
is criticized as being designed to block the entry of competitors
Which of the following was the first federal regulatory agency that Congress
established
in 1887 for the purpose of regulating railroad routes and rates?
A. The Federal Trade Commission
B. The Interstate Commerce Commission
C. The Environmental Protection Agency
D. The Food and Drug Administration - ANSWER-B. The Interstate Commerce
Commission
Which of the following statements is true of independent federal agencies?
A. They are usually the departments of the government's executive branch.
B. They are created via statutes labeled enabling legislation.
