Question 1

Resale price maintenance prevents retailers from competing on price.

Accepted Answer

A) True 
 B)False

Question 2

The business practice of tying:

Accepted Answer

A)   is also referred to as bundling
B)   is also referred to as full-line forcing
C)   can increase business revenue
D)   all of the above are trueE) A) and C)
F) B) and C)

Question 3

The argument that consumers will not be willing to pay any more for two items sold as one than they would for the two items sold separately is used to justify the legality of predatory pricing.

Accepted Answer

A) True 
 B)False

Question 4

Why is doing nothing sometimes considered an appropriate strategy to deal with monopoly?

Accepted Answer

Government regulation to try to limit th...

Question 5

The information obtained from a retail outlet can be considered a:

Accepted Answer

A)   private good
B)   cooperative good
C)   collective good
D)   public goodE) A) and B)
F) A) and C)

Question 6

Economists usually prefer private ownership to public ownership of natural monopolies because private owners have an incentive to:

Accepted Answer

A)   maximise cost as long as they reap part of the benefit in the form of lower profit
B)   minimise cost as long as they reap part of the benefit in the form of lower profit
C)   maximise cost as long as they reap part of the benefit in the form of higher profit
D)   minimise cost as long as they reap part of the benefit in the form of higher profitE) A) and D)
F) A) and B)

Question 7

One problem with requiring firms to list their prices in advance is:

Accepted Answer

A)   it will lead to an increase in competition
B)   it can make it easier for firms to collude
C)   it reduces the amount of searching customers need to do, limiting the effectiveness of competition
D)   firms do not necessarily know their prices in advanceE) B) and D)
F) B) and C)

Question 8

If a manufacturer does not exercise retail price maintenance, a free-rider problem may become evident among retailers and ultimately lead to:

Accepted Answer

A)   transparent pricing
B)   tying
C)   lower profits for the manufacturer
D)   higher profits for the manufacturerE) B) and C)
F) A) and C) C

Question 9

The business practice of tying is also referred to as:

Accepted Answer

A)   resale price maintenance
B)   predatory pricing
C)   bundling
D)   cost-plus pricingE) C) and D)
F) B) and C)

Question 10

Corporatisation is the process of providing incentives to make them behave more like private owners.

Accepted Answer

A) True 
 B)False

Question 11

Why do economists usually prefer private ownership to public ownership of natural monopolies?

Accepted Answer

Private owners have an incentive to mini...

Question 12

Mergers always decrease welfare as there is a reduction in competition.

Accepted Answer

A) True 
 B)False

Question 13

What is tying sales and why are economists skeptical that it leads to lower competition?

Accepted Answer

A tying sale is when a firm only sells o...

Question 14

If Canon were to require every store that carried its cameras to charge customers 20 per cent more than the store's cost for each camera, Canon would be practising:

Accepted Answer

A)   tying
B)   cost-plus pricing
C)   resale price maintenance
D)   aggressive marketingE) A) and B)
F) A) and C)

Question 15

The practice of requiring someone to buy two or more items together, rather than separately, is called:

Accepted Answer

A)   product fixing
B)   tying
C)   free riding
D)   resale maintenanceE) All of the above
F) A) and D)

Question 16

Explain the practice of tying and discuss why it is controversial.

Accepted Answer

Tying is the practice of bundling goods for sale. It is controversial because it is perceived as a tool for expanding the market power of firms by forcing consumers to purchase additional products. However, economists are skeptical that a buyer's willingness to pay increases just because two products are bundled together. In other words, simply bundling two products together doesn't necessarily add any value. It is more accurately believed to be a form of price discrimination.

Question 17

Tying can be thought of as a form of price discrimination.

Accepted Answer

A) True 
 B)False  True

Question 18

If regulators want to allow monopolists to keep some of the benefits from lower costs in the form of higher profit:

Accepted Answer

A)   marginal-cost pricing is required
B)   a departure from marginal-cost pricing is required
C)   public ownership of monopolies is required
D)   application of the Trade Practices Act is requiredE) A) and C)
F) A) and B)

Question 19

Re-sale price maintenance is a profit-maximising strategy used by wholesalers to restrict competition amongst retailers.

Accepted Answer

A) True 
 B)False

Question 20

An important benefit of private ownership of a monopoly is that a private monopoly has more incentive to:

Accepted Answer

A)   bargain for much lower wages for its workers
B)   charge a price that is consistent with that of a benevolent social planner
C)   lower its costs so that it can earn more profit
D)   price its good according to the intersection of marginal cost and average revenueE) A) and D)
F) B) and C)

Exam 18: Competition Policy

Resale price maintenance prevents retailers from competing on price.

Correct Answer
verified

The business practice of tying:

Correct Answer
verified

The argument that consumers will not be willing to pay any more for two items sold as one than they would for the two items sold separately is used to justify the legality of predatory pricing.

Correct Answer
verified

Why is doing nothing sometimes considered an appropriate strategy to deal with monopoly?

Correct Answer
verified
Government regulation to try to limit th...
View Answer

The information obtained from a retail outlet can be considered a:

Correct Answer
verified

Economists usually prefer private ownership to public ownership of natural monopolies because private owners have an incentive to:

Correct Answer
verified

One problem with requiring firms to list their prices in advance is:

Correct Answer
verified

If a manufacturer does not exercise retail price maintenance, a free-rider problem may become evident among retailers and ultimately lead to:

Correct Answer
verified
C

The business practice of tying is also referred to as:

Correct Answer
verified

Corporatisation is the process of providing incentives to make them behave more like private owners.

Correct Answer
verified

Why do economists usually prefer private ownership to public ownership of natural monopolies?

Correct Answer
verified
Private owners have an incentive to mini...
View Answer

Mergers always decrease welfare as there is a reduction in competition.

Correct Answer
verified

What is tying sales and why are economists skeptical that it leads to lower competition?

Correct Answer
verified
A tying sale is when a firm only sells o...
View Answer

If Canon were to require every store that carried its cameras to charge customers 20 per cent more than the store's cost for each camera, Canon would be practising:

Correct Answer
verified

The practice of requiring someone to buy two or more items together, rather than separately, is called:

Correct Answer
verified

Explain the practice of tying and discuss why it is controversial.

Tying can be thought of as a form of price discrimination.

Correct Answer
verified
True

If regulators want to allow monopolists to keep some of the benefits from lower costs in the form of higher profit:

Correct Answer
verified

Re-sale price maintenance is a profit-maximising strategy used by wholesalers to restrict competition amongst retailers.

Correct Answer
verified

An important benefit of private ownership of a monopoly is that a private monopoly has more incentive to:

Correct Answer
verified

Exam 18: Competition Policy

Resale price maintenance prevents retailers from competing on price.

Correct AnswerverifiedShow Answer

The business practice of tying:

Correct AnswerverifiedShow Answer

The argument that consumers will not be willing to pay any more for two items sold as one than they would for the two items sold separately is used to justify the legality of predatory pricing.

Correct AnswerverifiedShow Answer

Why is doing nothing sometimes considered an appropriate strategy to deal with monopoly?

Correct AnswerverifiedGovernment regulation to try to limit th...View AnswerShow Answer

The information obtained from a retail outlet can be considered a:

Correct AnswerverifiedShow Answer

Economists usually prefer private ownership to public ownership of natural monopolies because private owners have an incentive to:

Correct AnswerverifiedShow Answer

One problem with requiring firms to list their prices in advance is:

Correct AnswerverifiedShow Answer

If a manufacturer does not exercise retail price maintenance, a free-rider problem may become evident among retailers and ultimately lead to:

Correct AnswerverifiedC

The business practice of tying is also referred to as:

Correct AnswerverifiedShow Answer

Corporatisation is the process of providing incentives to make them behave more like private owners.

Correct AnswerverifiedShow Answer

Why do economists usually prefer private ownership to public ownership of natural monopolies?

Correct AnswerverifiedPrivate owners have an incentive to mini...View AnswerShow Answer

Mergers always decrease welfare as there is a reduction in competition.

Correct AnswerverifiedShow Answer

What is tying sales and why are economists skeptical that it leads to lower competition?

Correct AnswerverifiedA tying sale is when a firm only sells o...View AnswerShow Answer

If Canon were to require every store that carried its cameras to charge customers 20 per cent more than the store's cost for each camera, Canon would be practising:

Correct AnswerverifiedShow Answer

The practice of requiring someone to buy two or more items together, rather than separately, is called:

Correct AnswerverifiedShow Answer

Explain the practice of tying and discuss why it is controversial.

Tying can be thought of as a form of price discrimination.

Correct AnswerverifiedTrue

If regulators want to allow monopolists to keep some of the benefits from lower costs in the form of higher profit:

Correct AnswerverifiedShow Answer

Re-sale price maintenance is a profit-maximising strategy used by wholesalers to restrict competition amongst retailers.

Correct AnswerverifiedShow Answer

An important benefit of private ownership of a monopoly is that a private monopoly has more incentive to:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Government regulation to try to limit th...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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C

Correct Answer
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Correct Answer
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Correct Answer
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Private owners have an incentive to mini...
View Answer

Correct Answer
verified

Correct Answer
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A tying sale is when a firm only sells o...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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True

Correct Answer
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Correct Answer
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Correct Answer
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