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Questions
Q:
________ are vertical trade restraints that involve the seller's refusal to sell a product, the tying item, to a customer unless the customer purchases a second product.
Q:
Mergers between firms in unrelated businesses are known as ________ mergers.
Q:
Which of the following would best exemplify an oligopolistic industry?A) Local cable provider B) Movie studiosC) Hamburger restaurants D) Retail clothing stores
Q:
The ________ Act, enacted in 1950, widened the scope of Section 7 of the Clayton Act to include asset acquisitions.
Q:
It is necessary to prove actual injury in order for a plaintiff to recover in a price discrimination lawsuit.
Q:
Section 1 of the Sherman Act allows for intangible properties to be sold in tying arrangements.
Q:
According to the failing company doctrine, two or more smaller companies are allowed to merge to compete with a larger company even if they are highly profitable as smaller companies.
Q:
Refer to the above figure. The profit maximizing price for a monopolistic competitor isA) P1. B) P2. C) P3. D) P4.
Q:
The unfair advantage theory is intended to prevent wealthy companies from overwhelming the competition in a given market.
Q:
Vertical mergers create an increase in market share because the merging firms serve similar markets.
Q:
A profit-maximizing monopolist earns an economic loss wheneverA) it pays taxes to the government on each unit of output it produces.B) the price it charges for its product exceeds average total cost. C) the demand curve lies completely below the ATC curve.D) it produces along the elastic portion of a demand curve.
Q:
The merger of two grocery store chains that serve the same geographical market is an example of a horizontal merger.
Q:
The relevant product or service market generally includes substitute products or services that are reasonably interchangeable with the defendant's products or services.
Q:
The ________ is a defense in a Section 2(a) action which provides that a seller's price discrimination is not unlawful if the price differential is due to "differences in the cost of manufacture, sale, or delivery" of the product.
A) natural monopoly defense
B) meeting the competition defense
C) changing conditions defense
D) cost justification defense
Q:
________ is a restraint of trade in which a seller refuses to sell one product to a customer unless the customer agrees to purchase a second product from the seller.
A) A tying arrangement
B) Predatory pricing
C) Price fixing
D) A group boycott
Q:
Monopoly producers face
A) many competitors producing the same product.
B) only a few competitors producing the same product.
C) at least one competitive producer of the same product.
D) no competitive producers of the same product.
Q:
The ________ is an act that requires certain firms to notify the Federal Trade Commission and the Justice Department in advance of a proposed merger and comply with a thirty-day waiting period before the merger is approved.
A) Celler-Kefauver Act
B) Hart-Scott-Rodino Antitrust Improvement Act
C) Robinson-Patman Act
D) Sherman Act
Q:
Which of the following is considered a primary defense against Section 7 of the Clayton Act?
A) the Noerr doctrine
B) the Colgate doctrine
C) the failing company doctrine
D) conscious parallelism
Q:
________ are mergers between firms in totally unrelated businesses.
A) Market extension mergers
B) Conglomerate mergers
C) Horizontal mergers
D) Forward vertical mergers
Q:
A merger between two regional fruit-sellers that do not sell fruit in the same geographical area is an example of a ________.
A) market extension merger
B) conglomerate merger
C) horizontal merger
D) vertical merger
Q:
OutputTotal Costs100$400101402102405103409104414105420106427107435Refer to the above table. If the price is $3 the maximum profit this firm could earn isA) $99. B) $306. C) -$100. D) -$99.
Q:
What is a backward vertical merger?
A) a vertical merger between two or more companies that compete in the same business and geographical market
B) a vertical merger between two companies in similar fields whose sales do not overlap
C) a vertical merger in which a supplier acquires a customer
D) a vertical merger in which a customer acquires a supplier
Q:
What is a vertical merger?
A) a merger between firms in totally unrelated businesses
B) a merger that integrates the operations of a supplier and a customer
C) a merger between two companies in similar fields whose sales do not overlap
D) a merger between two or more companies that compete in the same business and geographical market
Q:
A merger between two or more companies that compete in the same business and geographical market is known as ________.
A) a horizontal merger
B) a vertical merger
C) a unilateral refusal to deal
D) conscious parallelism
Q:
The typical cost curves are U-shaped due to theA) law of diminishing marginal utility. B) law of supply.C) law of demand. D) law of diminishing marginal product.
Q:
How is a relevant market identified by Section 2 of the Sherman Act?
Q:
________ is a defense to a charge of monopolizing which recognizes that a small market can support only one competitor, such as a small-town newspaper.
Q:
Predatory pricing, which is used to drive out competition, is in violation of the ________.
Q:
The power of a firm to control prices or exclude competition, measured by the market share the defendant possesses in the relevant market, is known as ________.
Q:
A negative value for the marginal physical product would indicate thatA) the company has not yet reached the point of saturation. B) total output increased by a significant amount.C) total output decreased when the extra unit of the variable input was added. D) total output increased, but the increase was very small.
Q:
Natural monopolies are found to violate Section 2 of the Sherman Act.
Q:
Predatory pricing has been held to violate Section 2 of the Sherman Act.
Q:
The relevant geographical market is always considered statewide.
Q:
Section 2 of the Sherman Act prohibits the act of monopolization.
Q:
Economic profit isA) total revenue (explicit costs - implicit costs). B) total revenue - (explicit costs - implicit costs). C) total revenue + (explicit costs + implicit costs). D) total revenue - (explicit costs + implicit costs).
Q:
Which of the following is a defense to a charge of monopoly?
A) horizontal price fixing
B) natural monopoly
C) the setting of minimum resale prices
D) market sharing
Q:
Monopoly power is characterized by ________.
A) market share above 50 percent in the relevant market
B) market share above 60 percent in the non-relevant market
C) market share above 70 percent in the relevant market
D) market share above 80 percent in the non-relevant market
Q:
Give an account of the Noerr doctrine.
Q:
The ________ doctrineholds that two or more persons may petition the executive, legislative, or judicial branch of the government or administrative agencies to enact laws or to take other action without violating antitrust laws.
Q:
Use the above figure. Last week Joe consumed combination ʺBʺ of goods ʺXʺ and ʺY.ʺ This week he purchased combination ʺA.ʺ The reason for this change is that theA) price of good X has increased. B) price of good X has decreased. C) price of good Y has decreased. D) price of good Y has increased.
Q:
If two competing manufacturers of a similar product both separately reach an independent decision not to deal with a retailer, ________ is said to have occurred, which is not a violation of Section 1 of the Sherman Act.
Q:
The ________ doctrine states that a firm can unilaterally choose not to deal with another party without being liable under Section 1 of the Sherman Act.
Q:
The legality of nonprice vertical restraints of trade under Section 1 of the Sherman Act is examined by using the ________.
Q:
________ occurs when a party at one level of distribution enters into an agreement with a party at another level to adhere to a price schedule that either sets or stabilizes prices.
Q:
Using the utility-optimizing model, which of the following would induce a consumer to increase consumption of good x, a normal good?A) An increase in the marginal utility of xB) A decrease in the total utility of yC) An increase in the marginal utility of good yD) A decrease in income
Q:
Price fixing is a(n) ________ violation of Section 1 of the Sherman Act.
Q:
Contracts, combinations, and conspiracies in restraint of trade are outlawed by Section 1 of the ________ Act.
Q:
The ________ rule is applicable to restraints of trade considered inherently anticompetitive. Once this determination is made about a restraint of trade, the court will not permit any defenses or justifications to save it.
Q:
The Noerr doctrine holds that two or more persons may petition the government to enact laws or take other action without violating antitrust laws.
Q:
The income elasticity of demandA) is positive only. B) is negative only.C) must lie between -1 and +1. D) can be positive, negative, or zero.
Q:
Conscious parallelism occurs if two competing manufacturers of a similar product both separately reach an independent decision not to deal with a retailer.
Q:
A unilateral refusal to deal is a violation of Section 1 of the Sherman Act because there is a concerted action with others.
Q:
The legality of nonprice vertical restraints of trade under Section 1 of the Sherman Act is examined by using the rule of reason.
Q:
The setting of minimum resale prices is a rule of reason violation of Section 1 of the Sherman Act.
Q:
If the calculated price elasticity of demand between two points is -4, demand isA) inelastic. B) elastic.C) unresponsive to price. D) unit-elastic.
Q:
Division of markets is considered to be a type of horizontal restraint of trade.
Q:
Group boycotts can be either a per se violation or rule of reason violation.
Q:
Competitors who agree that each will serve only a designated portion of the market are deemed to be engaging in a group boycott.
Q:
The fact that price fixing helps consumers or protects competitors from ruinous competition can be used as a valid defense against the charge of price discrimination.
Q:
A resource that is a common property isA) oil on land owned by a drilling and refining company. B) natural gas on land owned by an energy producer.C) timber on land owned by a lumber company. D) water in a publicly owned river.
Q:
Only price fixing conducted by sellers is considered a violation of Section 1 of the Sherman Act.
Q:
Price fixing is a rule of reason violation of Section 1 of the Sherman Act.
Q:
Restraints that are not characterized as per se violations are not further examined using the rule of reason.
Q:
The per se rule is applicable to restraints of trade that are considered inherently anticompetitive.
Q:
Which of the following is an employer mandate in the new the federal governmentʹs new national health care program?A) Under the new program, the federal government will coordinate the establishment of health insurance exchanges.B) A tax rate of 3.8 percent will be assessed on nearly all earnings above $200,000 per year for individuals and above $250,000 per year for married couples.C) Firms with at least 50 employees must either provide health insurance or pay fines when uninsured employees receive tax subsidies to purchase insurance.D) Nearly all U.S. residents must either purchase health insurance coverage or pay a fine of up to $750 per year for an individual (up to $2,250 per year for a family).
Q:
A relevant market is characterized by the presence of ________.
A) unique goods and services
B) reasonably interchangeable goods and services
C) highly differentiated goods and services
D) pure monopoly of the defendant's goods and products
Q:
Which of the following is the rationale behind the Noerr doctrine?
A) state statutory law
B) the Uniform Commercial Code (UCC)
C) Article I of the U.S. Constitution
D) the Bill of Rights
Q:
________ is an antitrust principle which says that two or more persons can petition the executive, legislative, or judicial branch of the government or administrative agencies to enact laws or take other action without violating antitrust laws.
A) The Noerr doctrine
B) The Colgate doctrine
C) Nolo contendere
D) The de minimis exemption
Q:
The above figure displaysA) income-inequality curves. B) Gini Coefficients. C) Lorenz curves. D) Laffer curves.
Q:
Conscious parallelism occurs when ________.
A) parties at different levels enter into an agreement to adhere to a price schedule that stabilizes prices
B) one party makes an independent choice not to deal with another
C) two or more firms act the same but no concerted action is shown
D) a party's anticompetitive effects outweigh its procompetitive effects
Q:
Which of the following is true of the Colgate doctrine?
A) It is not a violation of Section 1 of the Sherman Act.
B) It is an example of a horizontal restraint of trade.
C) It is a per se violation of Section 1 of the Sherman Act.
D) It is a rule of reason violation of Section 1 of the Sherman Act.
Q:
________ occurs when an independent choice is made by one party not to deal with another party.
A) A non-price vertical restraint
B) A monopoly to deal
C) A unilateral refusal to deal
D) Conscious parallelism
Q:
The legality of nonprice vertical restraints of trade under Section 1 of the Sherman Act is examined by applying the ________.
A) Colgate doctrine
B) Noerr doctrine
C) per se rule
D) rule of reason
Q:
A secondary boycott isA) illegal according to the Taft-Hartley Act. B) a legal way to support striking workers. C) illegal according to the Wagner Act.D) legal according to the Sherman Act.
Q:
Restraints of trade that are unlawful under Section 1 of the Sherman Act only if their anticompetitive effects outweigh their procompetitive effects are known as ________.
A) nonprice vertical restraints
B) group boycotts
C) division of markets
D) the setting of minimum resale prices
Q:
A per se violation of Section 1 of the Sherman Act that occurs when a party at one level of distribution enters into an agreement with a party at another level to adhere to a price schedule that either sets or stabilizes prices is referred to as ________.
A) group boycotts
B) horizontal price fixing
C) resale price maintenance
D) nonprice vertical restraints
Q:
Which of the following is an example of a vertical restraint of trade?
A) group boycott
B) price fixing
C) resale price maintenance
D) division of markets
Q:
Which of the following is an example of a horizontal restraint of trade?
A) resale price maintenance
B) division of markets
C) unilateral refusal to deal
D) conscious parallelism
Q:
In a perfectly competitive industry, an individual firm facesA) a perfectly inelastic labor supply curve. B) a perfectly vertical labor supply curve.C) a perfectly elastic labor supply curve. D) none of the above.
Q:
A restraint of trade in which two or more competitors at one level of distribution agree not to deal with others at another level of distribution is known as ________.
A) group boycott
B) resale price maintenance
C) price fixing
D) market sharing