Beginning in 1965, the Head of the Antitrust Division of the U.S.Department

question 253

Multiple Choice

Beginning in 1965, the head of the Antitrust Division of the U.S.Department of Justice began to change antitrust policy.How did antitrust policy change?

• A)For the first time, horizontal mergers were allowed-with government approval-and vertical mergers were allowed without need for approval from the government.
• B)For the first time, concentration ratios were used to evaluate the degree of competition in the industries of firms that proposed mergers.
• C)The Division began to systematically consider the economic consequences of proposed mergers.
• D)Proposed mergers no longer needed the approval of the Federal Trade Commission or the court system.

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Definitions:

External Costs

Costs of a transaction or activity that affect parties who did not choose to incur that cost, often not reflected in the market price.

Social Cost

The total cost to society as a whole, including both private costs incurred by firms or individuals and external costs imposed on others.

Free Riders

A person who receives the benefit of a good without paying for it. Because it is often virtually impossible to restrict the consumption of public goods to those who pay, these goods are subject to free-rider problems.

Public Good

A commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization.