Question 1

A restraint involving collaboration among competitors at the same level in the chain of distribution is:

Accepted Answer

A horizontal restraint involves collaboration among competitors at the same level in the chain of distribution, such as retailers or manufacturers. This can take various forms, such as price fixing or market allocation, and is generally considered anti-competitive behavior. Vertical restraints, on the other hand, involve collaboration between different levels in the chain of distribution, such as manufacturers and distributors. Trusts are a type of corporate structure that allow multiple companies to be managed as a single entity.

Question 2

If a small manufacturer of vacuum cleaners conditions the sales of its cleaners on the buyer's purchasing only that manufacturer's bags,under the Sherman Act this is:

Accepted Answer

Conditioning the sales of a product on the buyer's purchasing of another product is known as a tying arrangement, which is a violation of the Sherman Act. Tying arrangements are not illegal per se, but they are closely scrutinized by the law to ensure that they do not violate antitrust laws. The manufacturer's condition of using only its bags with its vacuum cleaners is a form of tying arrangement, which violates the antitrust law.

Question 3

The concerted action requirement of the Sherman Act Section 1:

Accepted Answer

The concerted action requirement of the Sherman Act Section 1 can be established by an express agreement (A), is not met when a parent corporation and its wholly owned subsidiaries agree to a restraint in trade (B), and requires additional factors beyond conscious parallelism, such as identical sealed bids from each competitor (C).

Question 4

The 2010 Horizontal Merger Guidelines:

Accepted Answer

The 2010 Horizontal Merger Guidelines clarify that there is no single methodology for merger analysis and encourage a fact-specific approach that considers various factors such as market concentration, entry barriers, and potential anticompetitive effects. The guidelines were issued jointly by both the Justice Department and the FTC and do not reject the use of the Herfindahl-Hirschman Index, which is a commonly used measure of market concentration. Therefore, options A, B, C, and E are incorrect.

Question 5

The Clayton Act deals with which of the following situations?

Accepted Answer

The answer of The Clayton Act deals with which of...

Question 6

Masson Supply sells hinges to retail outlets for $1.20.If Rorsch Ltd.approaches Strunk Hardware,one of Masson's customers,and offers to sell a comparable hinge for $1.10:

Accepted Answer

The Robinson-Patman Act prohibits price discrimination only if it injures competition, and Masson lowering its price to Strunk would not harm competition since it is not offering a lower price to any other customer. Therefore, Masson may lower its price to Strunk without violating the Robinson-Patman Act.

Question 7

The National Tax Accountants Professional Association (TAPA) has recommended that its members charge a minimum of $25 per hour for completing tax forms. This recommendation is probably:

Accepted Answer

The answer of The National Tax Accountants Professional Association (TAPA)...

Question 8

A form of business association organized to carry out a particular business enterprise is a:

Accepted Answer

A joint venture is a form of business association organized to carry out a particular business enterprise. A sole proprietorship is a business owned by one person, tenancy in common is a form of property ownership, and a competitor is a rival business.

Question 9

Discuss the validity and effect of each of the following:
a.Two manufacturers of the same product decide to allocate territories with one taking the southern states.
b.A labor union encourages its members and all consumers to boycott a product manufactured by a company that refuses to honor a union contract.
c.Betty's Bargain Department Store sells its products for 10% under the suggested retail price. One manufacturer tells the store it will not supply wholesale goods to it unless it charges at least the suggested retail price.

Accepted Answer

The answer of Discuss the validity and effect of each...

Question 10

The Leegin Creative Leather Products,Inc.v.PSKS,Inc.case held that:

Accepted Answer

The Leegin Creative Leather Products, Inc. v. PSKS, Inc. case held that vertical agreements establishing minimum resale prices should be judged by the rule of reason standard instead of being considered per se illegal. This means that the overall impact of such agreements on competition and consumers must be evaluated on a case-by-case basis to determine if they are reasonable or not.

Question 11

Which of the following is true in relation to market share and monopoly power?

Accepted Answer

A market share between 50% and 75% is inconclusive on its own in determining monopoly power. Other factors, such as barriers to entry and the degree of product differentiation, must also be considered.

Question 12

Failure to comply with Section 1 or 2 of the Sherman Act:

Accepted Answer

Failure to comply with Section 1 or 2 of the Sherman Act can result in serious consequences, including imprisonment, fines for individuals up to $1 million per violation and for corporations up to $100 million per violation. Therefore, the correct option is D, which includes all of these possible consequences.

Question 13

The National Cooperative Research Act provides that:

Accepted Answer

The National Cooperative Research Act provides that joint ventures in the research and development of new technology are to be judged under the rule of reason test. This means that the joint venture will be examined to determine if it promotes competition or if it is anticompetitive. The Act also establishes some exemptions from antitrust laws for certain types of joint ventures in research and development.

Question 14

With tying arrangements,the courts may establish a seller's economic power by showing that:

Accepted Answer

All of the above factors may be considered by courts to establish a seller's economic power in tying arrangements. A dominant position in the tying market and an advantage over competitors in that market may demonstrate economic power, while a substantial number of customers accepting the tying arrangement may suggest that the seller is using its market power to coerce customers into the arrangement.

Question 15

W & W,Inc.manufactures and sells widgets.It sells widgets to Marklin of Marklin's Department Store and gives him a preference in pricing that discriminates against other retailers.Does Marklin have liability for price discrimination? Does W & W,Inc.have liability for price discrimination?

Accepted Answer

The answer of W & W,Inc.manufactures and sells widgets.It sells...

Question 16

Sarreno Cheese Co.supplies mozzarella cheese to pizza restaurants at $1.70 per pound.In order to snare the business of one large pizza chain,Sarreno offers to sell them cheese at $1.45 per pound.This will violate the Robinson-Patman Act unless:

Accepted Answer

The answer of Sarreno Cheese Co.supplies mozzarella cheese to pizza...

Question 17

Creativ-Design,Inc.has 68% of the market share in a particular geographic region for one of its products.Does Creativ-Design have a monopoly?

Accepted Answer

The answer of Creativ-Design,Inc.has 68% of the market share in...

Question 18

What are the major functions of the Federal Trade Commission (FTC)and what power does the FTC have?

Accepted Answer

The answer of What are the major functions of the...

Question 19

The National Cooperative Research Act:

Accepted Answer

The National Cooperative Research Act is designed to clear up uncertainty about the legality of joint ventures, making it easier for companies to collaborate on research and development of new technology. It does not prohibit the use of the rule of reason test and does not include treble damages for violations of the Sherman Act.

Question 20

Elko,Inc.and Fuldan,Inc.closely monitor each other's actions regarding the sale of consumer electronic products.Each corporation tries to match the other's product designs and specifications,prices,and advertising strategies.As a result,the two corporations have similar products,prices,and profits.Is this a violation of the antitrust laws?

Accepted Answer

The answer of Elko,Inc.and Fuldan,Inc.closely monitor each other's actions regarding...

Quiz 42: Antitrust