Quiz 38: Antitrust
Monopoly: Monopoly refers to a situation where there is only one supplier and manufacturer for a product. Acquiring monopoly in a wrong way is illegal. Monopoly is considered as legal unless it is gained by wrongful tactics. Determination of monopoly of Ms. S: Ms. S does not have monopoly in the given case as only 60 percent of the market has been occupied by her. Things that are needed to answer the question: • Elasticity of demand for the screws • Finding whether the sales fall as price increases • Finding if the sales follow suit as the quality falls • Determining if the market share has declined
Case synopsis: T Company sold gasoline to independent retailers and Gulf Oil in the State W. T Company charged a lower price to Gulf Oil and charged more to independent retailers. Hence, the independent retailers sued T Company for doing injustice to them. Robinson-Patman act (RPA): Robinson-Patman Act also known as the "Anti-Price-Discrimination-Act" is an adjustment to Clayton act. It is used in the country U.S. It is a federal law, which forbids anticompetitive practices by producers, in specific, price discrimination. Finding whether T Company violated Robinson-Patman act (RPA): It is found that T Company has violated the Robinson-Patman act (RPA) and is considered as illegal. If the company had fulfilled certain conditions, the transaction would have been considered as legal. The company should have proved that the price discrimination has not lessened the competition. The company should have proved that the costs of serving Gulf Oil are lower than the cost of serving other independent retailers. The seller must have proved that he is simply meeting competition.
Sherman act: Sherman act was passed to stop tremendous concentrations of economic power. Horizontal price fixing goes by the infringements of the Sherman act but the vertical pricing does not go by the violation of Sherman act. Hence, Option is correct. Likewise, The other options A, C, and D are not connected with the given act. They are interchanged with both right and wrong answers. Hence, the options A, C, and D are incorrect.