Competition and Regulation

When the pricing of goods or services are at such a low level that other suppliers cannot compete and are forced to leave the market is known as: ___________________ pricing.

The government would likely block a merger if the merger would

• bring two large companies together.

• decrease prices too much.

• lead to unfair market control.

• generate greater efficiencies.

Which of the following effects of an industry’s deregulation would show that it had failed to achieve its objective?

• Several large companies have gone bankrupt.

• Several large companies have merged.

• Market prices have risen significantly.

• The industry has expanded wildly.

Which of the following are ways deregulation impacts an industry? Check all that apply.

• Cut regulations and reduce competition.

• Eliminates price controls, which allows prices to fall.

• Removes barriers to entry, which allows new firms to enter the market.

• Supports the creation of monopolies.

___________ laws are statutes developed to protect consumers from rapacious business practices by making it illegal for businesses to compete in unfair ways.

Why might the government institute a price control?

• to allow monopolies to exist.

• to raise the prices of all goods.

• to help curb inflation and create balance in the marketplace.

• to favor businesses they support.

Which statement describes the impact of declining wages?

• No impact occurs

• Businesses begin manufacturing more goods

• Government can expect revenue to remain the same

• Individuals demand fewer goods and services

What is one way that government regulation can encourage competition?

• By protecting consumers from dangerous products.

• By investigating charges of discrimination in employment.

• By administering laws forbidding price-fixing and unfair advertising.

• By passing zoning laws limiting certain types of property use

In a mixed market economy, which of these would MOST likely be considered a basic function of government?

• to promote monopolies

• to correct market failures and redistribute income

• to regulate who can purchase services

• to ensure the financial stability of all citizens

In a monopoly, customers will pay a higher price because there are no alternative products to those of the supplier.

• True

• False