Question 1

Studious Computers, Inc., has the power to control the market for its prod?uct. Antitrust law regulates

Accepted Answer

A)  how Studious acquired its power and what it does with it. 
B)  neither how Studious acquired its power nor what it does with it. 
C)  only how Studious acquired its power. 
D)  only what Studious does with its power. 
A)  how Studious acquired its power and what it does with it. 
B)  neither how Studious acquired its power nor what it does with it. 
C)  only how Studious acquired its power. 
D)  only what Studious does with its power. A

Question 2

Java Bean Company imports coffee beans and sells them under two-year contracts to Mellow Roast, Inc., and other coffeemakers. The contracts require that during the two-year term a coffeemaker not buy beans from Java Bean's competitors. The contracts do not limit the coffeemakers' purchase of tea or other beverage ingredients from other suppliers, how?ever. In the second year of the contract, Mellow Roast protests that this arrangement violates antitrust law. Is Mellow Roast correct? If not, why not? If so, under which antitrust statute, or statutes, could these con?tracts be held illegal?

Accepted Answer

Java Bean's contracts are exclusive-dealing contracts. These contracts may be held illegal under the Sherman Act, the Clayton Act, or the Federal Trade Commission (FTC) Act. Section 1 of the Sherman Act prohibits any agreement that is an unreasonable restraint of trade. Under this prohibition, a contract is subject to the rule of rea?son. A court would consider the purpose of the arrangement, the powers of the parties, and the effect of their actions in restraining trade. If the anticompetitive effects outweigh the competitive benefits, the contracts would be held un?lawful. Section 3 of the Clayton Act specifically prohib?its exclusive-deal?ing contracts when their effect is to substantially lessen competition or tend to create a monopoly. Section 5 of the FTC Act prohibits unfair meth?ods of competition in or affecting commerce. If these contracts are held to be otherwise illegal under one of these stat?utes, that the contracts are lim?ited to two-year terms and do not pro?scribe the coffeemakers' purchase of tea and other beverage ingredients from other suppliers are not factors that would make them legal.

Question 3

A suit is filed against Maxi Corporation, alleging that the firm commit?ted the offense of monopolization. To determine whether Maxi has mo?nopoly power requires looking at

Accepted Answer

A)  only Maxi's size. 
B)  only the relevant geographical market. 
C)  only the relevant product market. 
D)  the relevant geographical market and the relevant product market. 
A)  only Maxi's size. 
B)  only the relevant geographical market. 
C)  only the relevant product market. 
D)  the relevant geographical market and the relevant product market. D

Question 4

Congress enacts a statute to outlaw a specific type of anticompetitive business agreement. Like other laws that regulate economic competition, this law is referred to as

Accepted Answer

A)  a federal trade commission act. 
B)  an antitrust law. 
C)  an interstate commerce act. 
D)  a suppressive restraint on trade. 
A)  a federal trade commission act. 
B)  an antitrust law. 
C)  an interstate commerce act. 
D)  a suppressive restraint on trade.

Question 5

A firm can have monopoly power without violat?ing antitrust law.

Accepted Answer

A) True 
 B)False

Question 6

Global Services Corporation engages in trade practices that may violate antitrust law. The Federal Trade Commission has the power to act against unfair trade practices under

Accepted Answer

A)  the Clayton Act. 
B)  the Federal Trade Commission Act. 
C)  the Interstate Commerce Act. 
D)  the Sherman Act. 
A)  the Clayton Act. 
B)  the Federal Trade Commission Act. 
C)  the Interstate Commerce Act. 
D)  the Sherman Act.

Question 7

Health Resources Corporation makes and sells Intake, the most prescribed name-brand cholesterol-lowering medication. Jerichol Company has the potential to make a generic version of the same drug. Health Resources pays Jerichol not to sell its product. This is

Accepted Answer

A)  a customer restriction. 
B)  a joint venture. 
C)  an exclusive-dealing contract. 
D)  a price-fixing agreement. 
A)  a customer restriction. 
B)  a joint venture. 
C)  an exclusive-dealing contract. 
D)  a price-fixing agreement.

Question 8

A joint refusal to deal with a particular person or firm is always a vio?lation of antitrust law.

Accepted Answer

A) True 
 B)False

Question 9

Fresh Vegetables, Inc., a wholesaler, refuses to sell its produce to Good Mart Stores, Inc., a re?tailer. Under the Sherman Act, this is

Accepted Answer

A)  "an unfair or deceptive act or practice." 
B)  a per se violation. 
C)  not a violation. 
D)  subject to analysis under the rule of reason. 
A)  "an unfair or deceptive act or practice." 
B)  a per se violation. 
C)  not a violation. 
D)  subject to analysis under the rule of reason.

Question 10

Engine Components, Inc., a manufacturer of vehicle parts, refuses to sell to Fix-It, Inc., a national vehicle service firm. Engine Components convinces Greasy Motor Parts Company, a competitor, to do the same. This is

Accepted Answer

A)  a group boycott. 
B)  an exclusive-dealing contract. 
C)  a price-fixing agreement. 
D)  a tying arrangement. 
A)  a group boycott. 
B)  an exclusive-dealing contract. 
C)  a price-fixing agreement. 
D)  a tying arrangement.

Question 11

Finely Engineered Parts Corporation (FEPC) and Great Gears & Gauges, Inc. (3G), are competitors selling certain machine parts that are otherwise generally unattainable in their geographic market. This market includes the states of California, Oregon, Washington, and Idaho. FEPC and 3G agree that FEPC will no longer sell in California and that 3G will no longer sell in Oregon, Washington, and Idaho. Have FEPC and 3G violated any antitrust law? If so, which one? Explain. If they had divided their market by type of customer rather than geographic are, would the result be the same? Why or why not?

Accepted Answer

FEPC and 3G have violated antitrust law.

Question 12

Minimum resale price maintenance agreements are subject to analysis under the rule of reason.

Accepted Answer

A) True 
 B)False

Question 13

The acquisition of monopoly power through anticompetitive means constitutes a violation of antitrust law.

Accepted Answer

A) True 
 B)False

Question 14

Exclusive-dealing contracts are per se violations of antitrust law.

Accepted Answer

A) True 
 B)False

Question 15

Under the rule of reason, a court will consider the purpose of an agree?ment between competitors.

Accepted Answer

A) True 
 B)False

Question 16

Delta Services, Inc., is the major wholesale distributor of software in the state of Florida. Its closest competitor is Efficient Systems Company, an?other Florida firm. The two firms agree that Delta will operate in south Florida and Efficient will operate in north Florida. This is

Accepted Answer

A)  a group boycott. 
B)  a market division. 
C)  a price-fixing agreement. 
D)  a tying arrangement. 
A)  a group boycott. 
B)  a market division. 
C)  a price-fixing agreement. 
D)  a tying arrangement.

Question 17

Cooperative research by small-business firms is exempt from antitrust law.

Accepted Answer

A) True 
 B)False

Question 18

By contract, Quality Metals Corporation forbids Resource Refining, Inc., a wholesale buyer of Quality's products, from purchasing the products of Quality's competitors. This exclusive-dealing contract is allowed

Accepted Answer

A)  under any circumstances. 
B)  unless its effect is to cause a competitor a loss of any business. 
C)  unless its effect is to substantially lessen competition. 
D)  unless there is no effect on a competitor. 
A)  under any circumstances. 
B)  unless its effect is to cause a competitor a loss of any business. 
C)  unless its effect is to substantially lessen competition. 
D)  unless there is no effect on a competitor.

Question 19

Monopoly power is an extreme amount of market power.

Accepted Answer

A) True 
 B)False

Question 20

North Mining Company and South Excavation Company agree to abide by the decisions of East Coast Financial Corporation as to their respective levels of production, markets, and prices, effectively reducing competition and increasing profits. This is most likely

Accepted Answer

A)  a common, legal, time-honored type of business arrangement. 
B)  an illegal restraint on trade. 
C)  an innovative, legally efficient approach to doing business. 
D)  an outdated, but legal business trust. 
A)  a common, legal, time-honored type of business arrangement. 
B)  an illegal restraint on trade. 
C)  an innovative, legally efficient approach to doing business. 
D)  an outdated, but legal business trust.

Exam 46: Antitrust Law

Studious Computers, Inc., has the power to control the market for its prod?uct. Antitrust law regulates

A suit is filed against Maxi Corporation, alleging that the firm commit?ted the offense of monopolization. To determine whether Maxi has mo?nopoly power requires looking at

Congress enacts a statute to outlaw a specific type of anticompetitive business agreement. Like other laws that regulate economic competition, this law is referred to as

A firm can have monopoly power without violat?ing antitrust law.

Global Services Corporation engages in trade practices that may violate antitrust law. The Federal Trade Commission has the power to act against unfair trade practices under

Health Resources Corporation makes and sells Intake, the most prescribed name-brand cholesterol-lowering medication. Jerichol Company has the potential to make a generic version of the same drug. Health Resources pays Jerichol not to sell its product. This is

A joint refusal to deal with a particular person or firm is always a vio?lation of antitrust law.

Fresh Vegetables, Inc., a wholesaler, refuses to sell its produce to Good Mart Stores, Inc., a re?tailer. Under the Sherman Act, this is

Engine Components, Inc., a manufacturer of vehicle parts, refuses to sell to Fix-It, Inc., a national vehicle service firm. Engine Components convinces Greasy Motor Parts Company, a competitor, to do the same. This is

Minimum resale price maintenance agreements are subject to analysis under the rule of reason.

The acquisition of monopoly power through anticompetitive means constitutes a violation of antitrust law.

Exclusive-dealing contracts are per se violations of antitrust law.

Under the rule of reason, a court will consider the purpose of an agree?ment between competitors.

Delta Services, Inc., is the major wholesale distributor of software in the state of Florida. Its closest competitor is Efficient Systems Company, an?other Florida firm. The two firms agree that Delta will operate in south Florida and Efficient will operate in north Florida. This is

Cooperative research by small-business firms is exempt from antitrust law.

By contract, Quality Metals Corporation forbids Resource Refining, Inc., a wholesale buyer of Quality's products, from purchasing the products of Quality's competitors. This exclusive-dealing contract is allowed

Monopoly power is an extreme amount of market power.

North Mining Company and South Excavation Company agree to abide by the decisions of East Coast Financial Corporation as to their respective levels of production, markets, and prices, effectively reducing competition and increasing profits. This is most likely

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

The Statute of Fraudswriting Requirements

Ethics and Business Decision Making

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crimes

Nature and Terminology

Agreement

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

E-Contracts and E-Signatures

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Checks, the Banking System, and E-Money

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Agency Formation and Duties

Liability to Third Parties and Termination

Employment and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporationsformation and Financing

Corporationsdirectors, Officers, Shareholders

Corporationsmerger, Consolidation, Termination

Corporationssecurities Law Corporate Governance

Law for Small Businesses

Administrative Law

Consumer Law

Environmental Law

Personal Property and Bailments

Real Property and Landlord-Tenant Relationships

Insurance

Wills and Trusts

Professional Liaility and Accountability

International Law in a Global Economy

Legal and Ethical Issues in Business

Legal Issues

Contracts and Business Law

Contracts and Liability

Banking and Payment Systems

Loan Security and Repossession in Credit Transactions

Employment Law and Ethics

Legal Issues in Corporate Governance and Business Operations

Legal and Ethical Issues in Environmental Protection and Consumer Rights

Legal Issues in Property and Land Use