Question 1

One of the main ways for a firm charged with violating the Robinson-Patman Act to defend itself is to show a(n) ____ for different prices charged in different markets or to different buyers.

Accepted Answer

A)  cost justification 
B)  efficiency justification 
C)  humanitarian justification 
D)  false justification 
E)  price justification

Question 2

One successful defense that some firms have recently used to argue that a merger should be allowed because the customers are large and sophisticated is called:

Accepted Answer

A)  the monopoly-buyer defense 
B)  the power-buyer defense 
C)  the aggregate-firm defense 
D)  the foreign-competition defense 
E)  the infant-industry defense

Question 3

The courts use the rule of reason to decide many antitrust cases because:

Accepted Answer

A)  the courts consider the facts surrounding a case to decide if a practice hurts or helps competition 
B)  it is reasonable to compare a case being tried to a previous case and use the decision from that case 
C)  the courts would rather use the rule of reason than go through a detailed economic analysis 
D)  all practices attacked under antitrust laws are anti-competitive and thus prohibited 
E)  none of the other choices

Question 4

Horizontal market division allows competing firms to:

Accepted Answer

A)  be more efficient 
B)  exercise monopoly power within a region 
C)  hire fewer workers 
D)  give better worker benefits 
E)  diversify into more markets

Question 5

Most copyrighted music is licensed for use by BMI and ASCAP (organizations that represent musicians, composers, and publishers of music). They charge set fees to music users through "blanket licensing," which does not allow music users to bargain over price. This was attacked as price fixing. The Supreme Court held the practice:

Accepted Answer

A)  legal using a rule of reason analysis because otherwise the market could not function well 
B)  legal because it involved copyrighted material not subject to the antitrust laws 
C)  illegal under a rule of reason analysis, ruling that prices must be negotiated or that there must be many more price categories than before 
D)  illegal under the per se rule against price fixing 
E)  none of the other choices

Question 6

Fact Pattern 20-1
MicroManage is the fastest growing home-software producer in the country. In 2000, it sold 6% of all home software in the U.S., but in 2011, it sold 55% of all home software. A recent issue of Computer Universe said that MicroManage was "the most dominant and aggressive of all home-software developers." Home software is a small part of the entire software industry.
In 2011, MicroManage proposed a merger with Game Master, its main rival. Game Master was responsible for 10% of all home-software sales in 2010. MicroManage's president says that the combination of the firms will allow MicroManage to lower costs and pass the savings on to its customers.
The Department of Justice filed suit to stop this merger, claiming the combination would give monopoly power to the merged firm. Justice insists that consumers would lose in the end.
-Refer to Fact Pattern 20-1. Which case might a court use as precedent to determine whether or not the MicroManage merger is legal?

Accepted Answer

A)  Standard Oil Co. of New Jersey v. U.S. 
B)  Broadcast Music, Inc. v. CBS 
C)  NCAA v. Board of Regents 
D)  Rylands v. Fletcher 
E)  Palsgraf v. Long Island Railroad

Question 7

Resale price maintenance is usually favored by:

Accepted Answer

A)  mass retailers 
B)  producers of well-known products 
C)  small retailers 
D)  both b and c 
E)  choices a, b, and c are all correct

Question 8

Monopsony power is:

Accepted Answer

A)  the same thing as monopoly power 
B)  market power on the sell side of the market 
C)  colloquially called a "seller's monopoly power" 
D)  colloquially called a "distributor's monopoly power" 
E)  none of the other choices are correct

Question 9

The Standard Oil Trust was found in violation of Section 1 of the Sherman Antitrust Act. That meant under a rule of reason, the Trust was guilty of monopolizing trade.

Accepted Answer

A) True 
 B)False

Question 10

A(n) ____ occurs when firms competing at the same level of business reach an agreement to divide the market on geographic or other terms.

Accepted Answer

A)  vertical market division 
B)  horizontal restraint of trade 
C)  sideways market division 
D)  real market division 
E)  antitrust market division

Question 11

Under the ____ two firms that plan to merge must notify the Antitrust Division of the Department of Justice or the Federal Trade Commission at least one month before the planned merger, if there is more than $50 million involved.

Accepted Answer

A)  Hart-Scott-Rodino Act 
B)  Lanham Act 
C)  Clayton Act 
D)  Norris-LaGuardia Act 
E)  Wagner Act

Question 12

As illustrated in State Oil Co. v. Khan, where a gasoline distributor controlled the maximum gas sales markup that its gas station dealers could charge (maximum price fixing), the Supreme Court has held that:

Accepted Answer

A)  vertical price fixing is always legal 
B)  vertical price fixing is never legal 
C)  vertical price fixing is acceptable per se if it benefits the industry 
D)  vertical price fixing is acceptable under the rule of reason if it benefits industry 
E)  none of the other choices are correct

Question 13

A retailer is told by the manufacturer the minimum price at which a product can be sold. In antitrust this is an example of:

Accepted Answer

A)  a tying arrangement 
B)  a boycott 
C)  exclusive dealing 
D)  market share liability 
E)  none of the other choices

Question 14

Which of the following is probably an illegal boycott?

Accepted Answer

A)  retailers join together to refuse to buy from distributors who do something the retailers do not like 
B)  distributors join together to refuse to sell to retailers who do something the wholesalers do not like 
C)  doctors in a city, agree through the City Medical Association, to refuse to take welfare patients because the city will not pay as much as the doctors think they should be paid 
D)  none of the other choices 
E)  all of the other specific choices

Question 15

The Sherman and Clayton Act provide strict guidelines for what illegal monopolization is.

Accepted Answer

A) True 
 B)False

Question 16

In Todd v. Exxon Corp., where Exxon other oil companies hired a consultant to gather information about the salaries they paid professionals at the companies, and the information was used to help set salaries, the appeals court noted that:

Accepted Answer

A)  if the companies shared the data equally among themselves, there was nothing illegal about the data exchange 
B)  if the companies made the data in a data exchange public, they could face criminal charges 
C)  if the companies refused to make the data in a data exchange public, they could face criminal charges 
D)  a court is more likely to approve a data exchange when the information is made public 
E)  a court is less likely to approve a data exchange when the information is made public

Question 17

The Sherman Act states that all contracts in restraint of trade are illegal.

Accepted Answer

A) True 
 B)False

Question 18

Most copyrighted music is licensed for use by BMI and ASCAP (organizations that represent musicians, composers, and publishers of music). They charge set fees to music users through "blanket licensing," which does not allow music users to bargain over price. This was attacked as price fixing. The Supreme Court held the practice:

Accepted Answer

A)  legal because the prices were "just and reasonable" 
B)  legal because it involved copyrighted material not subject to the antitrust laws 
C)  illegal under a rule of reason analysis, ruling that prices must be negotiated or that there must be many more price categories than before 
D)  illegal under the per se rule against price fixing 
E)  none of the other choices

Question 19

Lobbying members of the legislature to seek special favors for a competitor does not violate the antitrust laws.

Accepted Answer

A) True 
 B)False

Question 20

Mayora is a retail clothing chain selling Pollo and other quality brand clothing. Mayora has very high prices, usually 30% over suggested retail price. Pollo tells Mayora it is fed up with this high pricing. Pollo tells Mayora to stop selling its products above list price or it will cut off sales to Mayora. Is this a possible violation of the antitrust laws?

Accepted Answer

A)  no; such actions are specifically prohibited under the Robinson-Patman Act 
B)  yes; such actions violate the interlocking directorate section of the FTC Act 
C)  yes; such actions are a conspiracy to fix price illegal under the Sherman Act 
D)  yes; such actions may well be held a vertical restraints of trade 
E)  none of the other choices

Exam 20: Antitrust Law

One of the main ways for a firm charged with violating the Robinson-Patman Act to defend itself is to show a(n) ____ for different prices charged in different markets or to different buyers.

One successful defense that some firms have recently used to argue that a merger should be allowed because the customers are large and sophisticated is called:

The courts use the rule of reason to decide many antitrust cases because:

Horizontal market division allows competing firms to:

Resale price maintenance is usually favored by:

Monopsony power is:

The Standard Oil Trust was found in violation of Section 1 of the Sherman Antitrust Act. That meant under a rule of reason, the Trust was guilty of monopolizing trade.

A(n) ____ occurs when firms competing at the same level of business reach an agreement to divide the market on geographic or other terms.

Under the ____ two firms that plan to merge must notify the Antitrust Division of the Department of Justice or the Federal Trade Commission at least one month before the planned merger, if there is more than $50 million involved.

As illustrated in State Oil Co. v. Khan, where a gasoline distributor controlled the maximum gas sales markup that its gas station dealers could charge (maximum price fixing) , the Supreme Court has held that:

A retailer is told by the manufacturer the minimum price at which a product can be sold. In antitrust this is an example of:

Which of the following is probably an illegal boycott?

The Sherman and Clayton Act provide strict guidelines for what illegal monopolization is.

In Todd v. Exxon Corp., where Exxon other oil companies hired a consultant to gather information about the salaries they paid professionals at the companies, and the information was used to help set salaries, the appeals court noted that:

The Sherman Act states that all contracts in restraint of trade are illegal.

Lobbying members of the legislature to seek special favors for a competitor does not violate the antitrust laws.