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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
   
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. commoditization
D. imperfect information
   
Today, attention in the monopoly area is largely directed to:

A. preventing negative externalities.
B. curbing anticompetitive conduct.
C. controlling the formation of cartels.
D. regulating open competition.
   
I.R.S regulations are an example of __________ rules enacted by agencies
 
a. Legislative
b. Interpretive
c. Procedural
d. Executive
   
The _______ is an executive agency as it is part of the Department of Transportation, an executive branch of the government.
 
a. Federal Aviation Administration
b. Securities and Exchange Commission
c. Federal Communications Commission
d. Federal Trade Commission
Federal Aviation Administration
   
The _____ provides for the formal and informal rule making processes for legislative rules.
 
a. Occupational Safety and Health Act
b. Uniform Commercial Code
c. Administrative Procedure Act
d. Code of Federal Regulations
   
Identify a criticism of licensure.
 
a. It often blocks competitor entry into the market.
b. It exposes the public to unsafe goods.
c. It leads to decreased prices, thus adversely affecting business.
d. It promotes business that provide substandard services in the market.
   
Which of the following statements is true of federal agencies?


A. Federal agencies typically appoint commissioners for a life term.
B. Federal agencies avoid using the hybrid rule-making process.
C. The president has direct authority over the executive federal agencies.
D. The independent federal agencies are usually located within the departments of the executive branch of the government.
   
The ______ was enacted to provide a framework for agency rule-making and to detail broad standards for judicial review of agency decisions.


A. Public Records Act
B. Political Reform Act
C. Administrative Procedure Act
D. Uniform Adoption Act
   
Which of the following is an example of the federal regulatory authority of control of information?
A. Preventing the entry of certain products into the market
B. Directing that warning labels be stuck on products
C. Uniform pricing of cable TV services
D. Banning of a flame retardant used in children's nightwear
   
CartMedInc., an over-the-counter (OTC) drug manufacture, is directed by the Office of National Drug Control Policy (ONDCP) to refrain from
manufacturing cough syrups that exceed 22 percent alcohol content for children below the age of ten. This authority of the ONDCP falls under
which of the following federal regulatory categories?


A. Control of information
B. Control of rates
C. Control of standards
D. Control of cost
   
Identify the type of rules that offer an administrative agency's view of the meaning of those statues for which the agency has administrative responsibility.


A. Interpretive rules
B. Legislative rules
C. Procedural rules
D. Substantive rules
   
Which of the following statements is true of executive functions of federal agencies?


A. They always offer formal advice in response to requests.
B. They are empowered to resolve tax disputes.
C. They do not deal with the compliance with laws and regulations.
D. They hear workers' compensation claims but cannot resolve them.
   
Which of the following is an example of an executive function performed by a federal agency?


A. Leasing federal lands
B. Enacting procedural rules
C. Regulating internal revenue service
D. Publishing all federal rules and orders daily
   
Which of the following statements relates to procedural rules?


A. They define rights and duties, such as crimes and punishments, and civil rights and responsibilities.
B. They impose new duties on affected parties and have the effect of law.
C. They delineate a federal agency's internal operating structure and methods.
D. They offer a federal agency's view of the meaning of those statutes for which the agency has administrative responsibilities.
   
Federal Trade Commission rules providing for a cooling-off period of three business days within which the buyer may cancel door-to-door sales contracts are an example of an agency's application of its ______ rules.


A. procedural
B. interpretive
C. legislative
D. substantive
   
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 absence of government regulations.
D. They can be provided to consumers through a pricing system.
   
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
   
Which of the following ended Prohibition in 1993 and gave the states broad authority to regulate the sale of alcohol?


A. The 21st Amendment
B. The Commerce Clause
C. The 5th Amendment
D. The Supremacy Clause
   
The primary purpose of most of the early agencies was to address:


A. economic concerns.
B. discrimination issues.
C. environmental concerns.
D. product safety issues.
   
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
   
Internal Revenue Service regulations are an example of ______ rules.


A. substantive
B. interpretative
C. legislative
D. procedural
B.
   
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 business.
   
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
   
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 statues labeled enabling legislation.
C. They are not vested with substantial legislation so as to prevent autonomy.
D. They are created to delegate a portion of their authority to Congress.
   
Identify the correct statement about a federal agency.


A. An independent federal agency is usually located within the departments of the government's executive branch.
B. In a rule-making situation, a federal agency avoids using the hybrid process.
C. In creating a federal agency, Congress delegates a portion of its authority to that body.
D. A federal agency does not have substantial authority to regulate a specified segment of American life.
   
Which of the following statements is true of rule-making by agencies?


A. The agencies create rules that resemble laws but do not have the force of laws.
B. The federal government provides an online portal where the public can comment on proposed rules.
C. Legislative rules delineate the agency's internal operating structure and methods.
D. Procedural rules are policy expressions having the effect of law.
   
Which of the following statements is true of judicial review of agency rules?


A. Review of controversial, high visibility rules issued by agencies is not common.
B. Courts take a broad approach to judicial review of such cases.
C. Courts cannot overrule the agencies' interpretation of a rule.
D. Judges readily sustain the judgement of the agency where reasonable.
   
Which of the following statements is true of the Federal Communications Commission's (FCC) indecency rules?


A. FCC rules increase the price of cable TV services that broadcast indecent material.
B. FCC rules forbid indecent material on conventional broadcast services when children are likely to be in the audience.
C. FCC rules forbid indecent material on cable networks between 6pm and 10 am.
D. FCC rules apply to subscription services such as programming delivered via satellite.
   
A(n) ________ is an economics argument claiming that an individual or business that is protected from risk will increase its risk-taking behavior in the future in the belief that a bailout will follow, if needed.


A. unjust enrichment
B. unconscionable contract
C. wrongful discharge
D. moral hazard
   
Since the late 1970s, the United States has been in a period of deregulation during which:


A. federal agencies were newly created to undertake legislative functions of the government.
B. administrative agencies acted as governments, performing purely executive, legislative, and judicial roles.
C. federal powers were separated from the powers of the states.
D. great efforts were made to reduce the role of government in big portions of American life. Telecommunications were substantially returned to market forces.
   
Which of the following served as the basis for the creation of a fourth branch off government by Congress?


A. Agency commissioners are appointed in staggered terms, typically, of three years' duration.
B. Agencies must delegate a portion of their authority to Congress as they recognize that they are not the appropriate bodies to address the specific elements of certain problems.
C. The appointment of agency commissioners is done by the Senate with the advice of the president.
D. The appointment of agency commissioners for most of the independent agencies must reflect an approximate political balance between the two major parties.
   
Purely interstate commerce, with no effect on interstate commerce, is within the exclusive regulatory jurisdiction of the ___________
 
a. Federal executive agencies
b. Securities and Exchange Commission
c. States and localities
d. United States Congress
   
Identify a true statement about market rationality.
 
a. Traders' rationalities remain unaffected by hormonal changes while making financial decisions.
b. The free market system assumes limitations in rational decision making.
c. Information deficiency does not affect market rationality,
d. Financial traders often operate with bounded rationality.
   
In a free market the government sometimes imposes regulations too __________.
 
a. Promote the flow of asymmetric information,
b. Ensure that some information is unavailable to decision makers.
c. Maintain the constant flow of perfect information.
d. Improve the available information.
   
The federal governments authority over interstate commerce _________.
 
a. Expressly forbids state regulation of interstate commercial activities.
b. Allows tariffs and local duties to be placed on concerned states.
c. Prevents unimpeded movement of goods among states.
d. Allows it to create a borderless market throughout the nation.
   
In the event of an irreconcilable conflict between federal and state law, the Supremacy Clause of the Constitution provides that.
 
a. Federal law will preempt state or local law, rendering it unconstitutional.
b. State law will preempt federal law, rendering it unconstitutional.
c. Local laws will remain supreme as they are enacted by bodies very close to the people.
d. Commercial law will preempt common law, rendering it unconstitutional.
   
The state government of the United States ________
 
a. Cannot pass laws forbidding false advertising and usury.
b. Are primarily responsible for regulating the insurance agency.
c. Have exclusive authority over foreign.
d. Are excluded from regulating banking and security services
   
The _______, a part of the Dodd-Frank Wall Street Reform, imposes a limit on the amount of a banks owned assets that can be used for some risky form of propriety trading.
 
a. The Volcker Rule
b. The Uniform Commercial Code
c. The Code of Federal Regulations
d. The Brown-Kaufman amendment
   
The costs and benefits of goods and services that are not completely internalized by producers and consumers are labeled by economists as _________.
 
a. Externalities
b. Market Failures
c. Rationalities
d. neighborhood Defects
   
Gas, electricity, and sewage disposal are examples of ________ that are regulated by the state governments.
 
a. Public utilities
b. Individual mandates
c. Negative spillovers
d. Private goods
   
Regulatory measures by the government at the request of the industry are effective in __________.
 
a. Reducing or eliminating the entry of competitors
b. Providing compensation for racism and sexism
c. Curbing the problems of unemployment and recession
d. Permitting the process of illegal price fixing
   
In the context of duty of agencies to control rates, the deregulation movement _______
 
a. Led to a general decline in agency rate-setting.
b. Prevented airlines from charging higher ticket prices
c. Compelled companies to disclose consumer information that would otherwise remain private
d. Enabled agencies to set prices within their jurisdiction
   
Which of the following agency duties focuses on controlling business entities from entering a certain economic activity, thereby protecting public interest?
 
a. Control of supply
b. Control of conduct
c. Control of rates
d. Control of information
   
_________ is a characteristic of a negative externality
 
a. Price raise
b. Immunization
c. Pollution
d. Waste management
   
As part of their executive functions, federal agencies ________
 
a. Create rules that in effect are laws
b. Enforce agency rule
c. Conduct administrative hearings present by administrative law judges
d. Protect the public by ensuing compliance with law and regulation Protect the public by ensuing compliance with law and regulation
   
Market failure occurs when _______
 
a. The market is able to serve the public interest
b. The market is self regulated
c. There is government intervention in the market
d. There are imperfections in the market
   
Historically, federal agencies charged with regulating utilities and
carriers settle the process to be charged for the services offered
within their jurisdiction
 
a. True
b. False
   
Which of the following is an example of an executive function performed by a federal agency?
 
Regulating internal revenue service
Enacting procedural rules
Leasing federal lands
Publishing all federal rules and orders daily
   
Adjudication ordinarily involves standards to be applied to the future conduct of a class of unspecified parties.
 
True
False
   
With regard to the federal regulatory process, free-market activists want to do which of the following?
 
Allow the government to prevent and correct market failure
Permit the government to intervene in matters such as education and energy policy
Reduce government's ability to prevent and correct market failure
Increase deregulation by sharply reducing government
   
Which of the following was one of government's original roles in business:
 
Acting as a referee
   
One way in which government protects private property is to provide
 
patents or copyright
   
Federal agencies have all but which of the following executive functions?
 
Conducting inspections and investigations and collecting information
Ensuring compliance with laws and regulations
Hearing and settling workers' compensation claims
Creating rules that, in effect, are laws.
   
Optimal efficiency often demands one uniform federal rule rather than a patchwork of 50 state rules.
 
True
False
  For a monopolist, the firm demand function and the industry demand function are one and the same. True or false? Explain.
 
True
False
   
Which of the following rules offer an administrative agency's view of the meaning of those statutes for which the agency has administrative responsibility?
 
Substantive rules
Legislative rules
Procedural rules
Interpretive rules
   
What is the profit maximizing condition for the competitive firm
 
MC = MR
   
Government is involved in settling business disagreements through the use of
 
courts
   
Why does government set and collect taxes?
 
To help pay the expenses of government
   
One of the reasons that has caused government's role in business to expand is that
 
people's attitudes have changed.
   
What is the purpose of government regulation of business activities that might cause air or water pollution?
 
To conserve the environment
   
In the event of an irreconcilable conflict between federal and state law, the Supremacy Clause provides that federal law will preempt state or local law rendering it unconstitutional.
 
True
False
   
States cannot regulate insurance as this is solely a federal responsibility.
 
True
False
   
In perfect competition, the firm demand function and the industry demand function are one and the same. True or false?
 
True
False
   
Administrative law principles are generally applicable to the conduct of state and local governments.
 
True
False
   
When all the costs and benefits of a good or service are not fully internalized or absorbed by producers or consumers, those costs or benefits fall elsewhere as externalities.
 
True
False
   
Local government intervention in business typically involves various licensure requirements.
 
True
False
   
Administrative law principles are generally applicable to the conduct of state and local governments.
 
True
False
   
Agency commissioners are appointed typically for a life term.
 
True
False
   
Administrative agencies act as pseudo governments, performing purely executive, legislative and judicial roles.
 
True
False
   
Adjudication ordinarily involves standards to be applied to the future conduct of a class of unspecified parties.
 
True
False
   
The right of the state governments to promote the public health, safety, morals, and general welfare is known as police power.
 
True
False
   
The government intervenes to thwart anticompetitive behaviors throughout the marketplace.
 
True
False
   
Federal agency rules and orders cannot be challenged in court.
 
True
False
   
A natural monopoly exists where a single large firm, such as a utility, is more efficient than several small ones.
 
True
False
   
Police power refers to the right of the state governments to promote the public health, safety, morals, and general welfare.
 
True
False
   
Purely intrastate activities can be regulated by the federal government if they have a substantial effect on interstate commerce.
 
True
False
   
The Commerce Clause as interpreted by the judiciary, affords private companies exclusive discretion over foreign commerce.
 
True
False
   
Adhering to free market principles, the government is reluctant to thwart anticompetitive behaviors in the marketplace.
 
True
False
   
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.
 
True
False
   
Negative externalities are those in which a decision maker does not receive the full benefit of a decision.
 
True
False
   
The Supremacy Clause of the U.S. Constitution broadly specifies the power accorded to the federal government to regulate
business activity.
 
True
False
   
Optimal efficiency often demands one uniform federal rule rather than a patchwork of 50 state rules.
 
True
False
   
The U.S. Constitution does not expressly forbid state regulation of interstate commerce.
 
True
False
   
When a business does not realize all of the benefits of its decision, this situation is known as a positive externality.
 
True
False
   
When market is unable to serve public interest due to certain inherent imperfections in the market itself
 
Market failure
   
Reasoned decision requires adequate information, therefore governments impose regulations to either improve available
information or to diminish unfavorable effect of inadequate information
 
Imperfect information
   
Federal law preempts state law
 
Supremacy clause
  Laws governing agencies that technically address the whole executive branch
 
Administrative law
   
Which of the following government actions is most likely to stimulate the economy
 
Lowering tax rates
   
What is the government doing when it buys wheat to keep the price high enough for farmers to make a profit?
 
Using price supports
   
Equal opportunity commission, EPA, OSHA, and consumer product safety commission
 
Agencies created in the 1960s and 1970s
   
A statute enacted by Congress that authorizes the creation of an administrative agency and specifies the name, composition,
purpose, and powers of the agency being created.
 
Enabling legislation
   
Existence of a problem and recognizes they are not the appropriate body to address that specific problem
 
Purpose of creating an agency
   
Agencies, mini governments created to handle day-to-day complicated problems
 
Fourth branch of government
   
Protect public through ensuring compliance with laws and regulations
 
Executive function in agencies
   
Agencies create rules that are in fact laws, these rules provide details necessary to carryout the intentions of the enabling legislation
 
Legislative function in agencies
   
The goals of government are to protect the rights of individuals and businesses and to provide a stable environment,
but the main goal of business is to
 
make a profit
   
Which of the following is a public good that is provided by government
 
Interstate highways
   
Government uses some of the tax money it collects from individuals and businesses to support public welfare programs.
What is the benefit of these welfare programs to businesses in a private enterprise economy?
 
Funds received by recipients are spent in businesses.
   
Rule-making process for agencies
 
Informal and formal
   
Government tries to protect competition by
 
regulating monopolies.
   
When government sets safety standards for the workplace, it is attempting to
 
minimize risks to employees.
   
Government provides protection to business owners' property through the use of
 
zoning laws.
   
Which of the following regulatory agencies would be concerned with price fixing and unfair competitive practices
 
Federal Trade Commission
   
Government can prevent unqualified persons from operating a business by
 
refusing to grant them a license.
   
in the Federal Register
 
Each process begins with publication of a Notice of Proposed Rule Making
   
A restaurant fails to meet government regulations, so it loses its __________ and is no longer allowed to do business.
 
license
   
Which of the following is a positive effect of government regulation
 
Legal protection
   
The two main sources of revenue used to pay the costs of government regulation are
 
taxes and borrowing.
   
Difference between informal and formal rules
 
In informal rule making, the agency must permit written comments on the proposal and may hold open hearings
   
In formal rule making, agency must hold a public hearing conducted with
 
most of the procedural safeguards of a trial
   
Congress can dissolve agencies, controls budgets, thus encouraging or discouraging actions
 
Constraints on agencies
   
Reduce business efficiency, kills jobs, hurts innovation, high compliance costs, curbs freedom, high taxes
 
Impact of excessive regulation
   
Vast highway network, legal equality for minorities and women, cleaner air, safer workplace, diminished child labor, enhanced auto safety
 
Insufficient regulation and arguments to improve
   
What's the most common way agencies settle cases
 
Consent degree
   
Which Agency protects consumers and investors
 
U.S. Federal Trade Commission, Bureau of Consumer Protection
   
What Agency regulates workplace conditions?
 
U.S. Equal Employment Opportunity Commission
   
A government issued instrument that represents the promise to repay the amount borrowed at the end of that time and to pay the lender a specified rate of interest for the use of the money
 
Bond
   
The Consumer Product Safety Commission is:
 
The federal regulatory agency that sets and enforces safety standards on consumer items
   
Courts:
 
are used by the Government when settling business disagreements
   
What agency’s whose purpose is to regulate interstate and international communications by radio, television, wire, satellite and cable
 
Federal Communications Commission
   
The federal regulatory agency that would be concerned with price fixing and unfair competitive practices:
 
Federal Trade Commission
   
These funds received by recipients are spent in businesses.
 
A benefit of welfare programs to businesses in a private enterprise economy
   
Determine whether the following statement is true or false: Government has become an active participant in the world of business
 
True
   
Acting as a referee
 
The original role of government's influence in business
   
Agency that conserves the environment
 
U.S. Environmental Protection Agency