exam 3

Question 1

the sherman act 1890

Answer 1

Prohibits conspiracies in restraint of trade, including mergers, contracts, or acquisitions that threaten to monopolize an industry.

Violations of this act result in up to 1 million dollar fines. Can subject executives to imprisonment.

Question 2

The clayton act 1914

Answer 2

to prevent the development of monopolies.
prohibits price discrimination, exclusive dealing agreements, certain types of mergers, and interlocking boards of directors amoung competing firms

Question 3

Federal Trade Commission act 1914

Answer 3

Created an agency that could study industry structures and behavior to identify anticompetitive practices.

Question 4

What are externalities of market failure

Answer 4

The uncompensated impact of one person’s actions on the well-being of bystanders/the third party.

adverse impact –> negative externality
beneficial impact –> positive externality

Question 5

what is the problem with decision makers?

Answer 5

they fail to take account of the external effects of their behavior.

Question 6

what are the two most common methads to force firms to reduce production?

Answer 6

tax goods that cause negative externalities
regulate the production of goods that cause negative externalities

***BOTH ATTEMPT TO REDUCE PRODUCTION