Which of the following statements is true?
a. A vertical merger is a merger of firms that compete in the same market.
b. The rule of reason doctrine declares that the existence of monopoly alone is illegal.
c. Government regulation is economically justifiable for a natural monopoly.
d. Deficient information on unsafe products causes underconsumption.
QUESTION 2A major reason for the development of money market mutual funds in the 1970s was that:
a. open-market operations were suspended.
b. bank deposit rates were capped at levels below market interest rates.
c. money market funds offered more flexible checking privileges than banks.
d. they were considered to be safer than banks.
e. money markets did not exist until 1970.
QUESTION 3Research and development is most likely to have an impact on the _____.
a. quantity of labor available
b. quantity of capital goods available
c. quality of labor available
d. quality of capital goods available
e. use of energy
QUESTION 4The government will have to subsidize a natural monopoly in the long run if regulators choose to pursue:
a. marginal cost pricing
b. fair-return pricing.
c. per se pricing.
QUESTION 5In the 1970s, U.S. consumers transferred their deposits from accounts in banks and thrifts to money market mutual funds because money market mutual funds:
a. were more liquid.
b. were less risky.
c. paid higher interest rates.
d. were guaranteed for a larger amount.
e. were more liquid and paid higher interest rates.
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