Question 1

An advocate of the Chicago School's position on antitrust legislation would ask which of the following questions?

Accepted Answer

A) "Has a competitor been harmed?" 
B) "Has competition been harmed?" 
C) "Will competitors be allowed to freely enter the market?" 
D) "Will interstate commerce be affected?" 
A) "Has a competitor been harmed?" 
B) "Has competition been harmed?" 
C) "Will competitors be allowed to freely enter the market?" 
D) "Will interstate commerce be affected?" B

Question 2

If competitors act in concert but without an explicit agreement,they are engaged in

Accepted Answer

A) a tying arrangement. 
B) monopolization. 
C) reciprocal dealing. 
D) conscious parallelism. 
A) a tying arrangement. 
B) monopolization. 
C) reciprocal dealing. 
D) conscious parallelism. D

Question 3

A monopoly is illegal

Accepted Answer

A) under any circumstances,under Section 2 of the Sherman Act. 
B) only if it is gained or maintained by using wrongful tactics. 
C) if you have greater than 50 percent of market share. 
D) any time there are no interchangeable products. 
A) under any circumstances,under Section 2 of the Sherman Act. 
B) only if it is gained or maintained by using wrongful tactics. 
C) if you have greater than 50 percent of market share. 
D) any time there are no interchangeable products. B

Question 4

The Clayton Act prohibits anticompetitive mergers.

Accepted Answer

A) True 
 B)False

Question 5

Under which circumstance is it legal to charge a lower price to a particular buyer?

Accepted Answer

A) if the items are the same 
B) if the price discrimination lessens competition 
C) if the costs of serving that particular buyer are lower 
D) All of these are correct. 
A) if the items are the same 
B) if the price discrimination lessens competition 
C) if the costs of serving that particular buyer are lower 
D) All of these are correct.

Question 6

Companies with substantial assets must notify the FTC before consummating a merger.

Accepted Answer

A) True 
 B)False

Question 7

Explain horizontal price-fixing and vertical minimum and maximum price-fixing.Discuss their status under antitrust laws.

Accepted Answer

Horizontal price-fixing is the agreement

Question 8

A refusal to deal

Accepted Answer

A) is a right to decide with whom to do or not to do business and cannot be legally limited. 
B) is a rule of reason violation of the Sherman Act and is illegal if it harms competition. 
C) is an agreement in which a buyer refuses to purchase goods from a supplier unless the supplier also purchases items from the buyer. 
D) occurs when a manager refuses to recognize that price-fixing is a problem. 
A) is a right to decide with whom to do or not to do business and cannot be legally limited. 
B) is a rule of reason violation of the Sherman Act and is illegal if it harms competition. 
C) is an agreement in which a buyer refuses to purchase goods from a supplier unless the supplier also purchases items from the buyer. 
D) occurs when a manager refuses to recognize that price-fixing is a problem.

Question 9

An automatic breach of antitrust laws is called a

Accepted Answer

A) refusal to deal. 
B) per se violation. 
C) conscious parallel. 
D) rule of reason violation. 
A) refusal to deal. 
B) per se violation. 
C) conscious parallel. 
D) rule of reason violation.

Question 10

Smalltown has two family-owned hardware stores that have been in business for years.Major Hardware decides that Smalltown would be a good place to build one of its superstores.Major opens,advertising unbelievably low prices;in fact,at below cost.Because Major owns stores nationally,it is able to keep prices extremely low until both of the family-owned stores have to go out of business because they cannot compete.After Major is the only hardware store in town,it raises its prices enough to make up for its former losses and to make some additional profit.Discuss this behavior in relation to antitrust law.

Accepted Answer

Major has engaged in predatory pricing.I

Question 11

Pat's Pen Co.manufacturers and sells an inexpensive ball-point pen.Salley's Stationery purchases the pens for $.25 each in quantities of 1,000.Salley's discovers that a national chain,a competitor of Salley's,buys the pen at $.20 each for quantities of 1,000.If Salley's Stationery sues Pat's Pen Co.for price discrimination

Accepted Answer

A) Pat's Pen Co.will win if it can prove that it has been selling to the national chain continuously at the cheaper rate. 
B) Pat's Pen Co.will win if it can prove that it did not intend to economically harm Salley's Stationery. 
C) Salley's Stationery will win if it can prove price discrimination occurred and that it lessened competition. 
D) Salley's Stationery will win since price discrimination is a per se violation with no real defenses. 
A) Pat's Pen Co.will win if it can prove that it has been selling to the national chain continuously at the cheaper rate. 
B) Pat's Pen Co.will win if it can prove that it did not intend to economically harm Salley's Stationery. 
C) Salley's Stationery will win if it can prove price discrimination occurred and that it lessened competition. 
D) Salley's Stationery will win since price discrimination is a per se violation with no real defenses.

Question 12

Which of the following is a vertical cooperative strategy?

Accepted Answer

A) market division 
B) price-fixing 
C) reciprocal dealing 
D) joint venture 
A) market division 
B) price-fixing 
C) reciprocal dealing 
D) joint venture

Question 13

A vertical allocation of customers or territory

Accepted Answer

A) is a per se violation of Section 1 of the Sherman Act. 
B) is a rule of reason violation of the Sherman Act. 
C) is not a violation of the Sherman Act. 
D) is illegal if it adversely affects one party over the other. 
A) is a per se violation of Section 1 of the Sherman Act. 
B) is a rule of reason violation of the Sherman Act. 
C) is not a violation of the Sherman Act. 
D) is illegal if it adversely affects one party over the other.

Question 14

Both the Justice Department and the Federal Trade Commission have the authority to enforce antitrust laws.

Accepted Answer

A) True 
 B)False

Question 15

Ed was an independent owner of a chain of TV stores.He successfully got customers into his store by cutting his prices on widely advertised name-brand products in order to sell other products for which he received a bigger profit.When the manufacturers of three of the name-brand products discovered Ed's actions,they agreed secretly to stop selling him their TVs.The three manufacturers

Accepted Answer

A) are doing nothing illegal,as they did not get Ed to agree to anything. 
B) are free to agree not to deal with Ed since the public can go elsewhere and will not be hurt economically. 
C) can choose either as a group to deal or not to deal with any retailer they want. 
D) are engaged in a rule of reason violation of the antitrust laws if their action harms competition. 
A) are doing nothing illegal,as they did not get Ed to agree to anything. 
B) are free to agree not to deal with Ed since the public can go elsewhere and will not be hurt economically. 
C) can choose either as a group to deal or not to deal with any retailer they want. 
D) are engaged in a rule of reason violation of the antitrust laws if their action harms competition.

Question 16

Both per se and rule of reason violations of the Sherman Act are automatically illegal.

Accepted Answer

A) True 
 B)False

Question 17

If a company has violated antitrust laws,

Accepted Answer

A) the Justice Department can initiate only noncriminal charges against the violator. 
B) the Federal Trade Commission may file criminal proceedings against the violator. 
C) any private person or company that has been harmed by the violator can file a lawsuit to recover damages. 
D) both the Justice Department and the Federal Trade Commission can bring criminal proceedings. 
A) the Justice Department can initiate only noncriminal charges against the violator. 
B) the Federal Trade Commission may file criminal proceedings against the violator. 
C) any private person or company that has been harmed by the violator can file a lawsuit to recover damages. 
D) both the Justice Department and the Federal Trade Commission can bring criminal proceedings.

Question 18

Explain the overall purposes of the Sherman Antitrust Act,the Clayton Act,and the Robinson-Patman Act.How do each of these Acts relate to each other?

Accepted Answer

The Sherman Antitrust Act was created in

Question 19

Under modern antitrust law analysis,a company with a market share between 70 and 90 percent has a monopoly.

Accepted Answer

A) True 
 B)False

Question 20

Exclusive dealing contracts,if they have an anticompetitive effect,are illegal under the

Accepted Answer

A) Sherman Act only. 
B) Clayton Act only, 
C) Sherman Act and Clayton Act. 
D) Sherman Act,Clayton Act,and Robinson-Patman Act. 
A) Sherman Act only. 
B) Clayton Act only, 
C) Sherman Act and Clayton Act. 
D) Sherman Act,Clayton Act,and Robinson-Patman Act.

Exam 38: Antitrust

An advocate of the Chicago School's position on antitrust legislation would ask which of the following questions?

If competitors act in concert but without an explicit agreement,they are engaged in

A monopoly is illegal

The Clayton Act prohibits anticompetitive mergers.

Under which circumstance is it legal to charge a lower price to a particular buyer?

Companies with substantial assets must notify the FTC before consummating a merger.

Explain horizontal price-fixing and vertical minimum and maximum price-fixing.Discuss their status under antitrust laws.

A refusal to deal

An automatic breach of antitrust laws is called a

Which of the following is a vertical cooperative strategy?

A vertical allocation of customers or territory

Both the Justice Department and the Federal Trade Commission have the authority to enforce antitrust laws.

Both per se and rule of reason violations of the Sherman Act are automatically illegal.

If a company has violated antitrust laws,

Explain the overall purposes of the Sherman Antitrust Act,the Clayton Act,and the Robinson-Patman Act.How do each of these Acts relate to each other?

Under modern antitrust law analysis,a company with a market share between 70 and 90 percent has a monopoly.

Exclusive dealing contracts,if they have an anticompetitive effect,are illegal under the

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