Q&A Hero

Q: A few firms sharing monopoly power constitute a(n) _____. A. monopsony B. monopolistic market C. oligopoly D. perfectly competitive market

Q: Conditions where the market will support only one firm or where large economies of scale exist are termed _____. A. oligopoly B. oligopsony C. monopsony D. natural monopoly

Q: Which act forbids attempts to monopolize as well as monopoly itself? A. The Sherman Act B. The SarbanesOxley Act C. The RobinsonPatman Act D. The Wagner Act

Q: Which of the following is an advantage of mergers? A. Mergers may improve credit access. B. Mergers may lead to lower market concentration. C. Mergers tend to reduce barriers to entry. D. Mergers help shape political affairs.

Q: Which of the following is a potential virtue of mergers? A. A single merger can trigger a merger movement among industry competitors. B. Mergers may permit stronger competition with previously larger rivals. C. Mergers can significantly shape political affairs. D. Mergers concentrate too much power in too few hands.

Q: In 2000, Microsoft was deemed to have violated federal antitrust laws by using _____. A. price discrimination B. monopoly power C. predatory pricing D. conglomerate mergers

Q: Which of the following statements is true of antitrust law? A. Antitrust laws facilitate market foreclosure by raising barriers to entry. B. Antitrust laws are designed to curb competition that poses threats to market dominant companies. C. Antitrust law does not apply in the event of a conglomerate merger. D. Antitrust law does not punish efficient companies who legitimately earn and maintain large market shares.

Q: A(n) _____ is a situation in which one firm holds the power to control prices and/or exclude competition in a particular market. A. oligopsony B. oligopoly C. monopoly D. perfect competition

Q: Which of the following is a part of the general legal test for monopolization? A. Monopoly as a consequence of a superior product B. Growth or development as a consequence of historic accident C. The existence of a natural monopoly in that industry D. The willful acquisition or maintenance of monopoly power

Q: Which of the following data is generally used by the federal government in combination with evidence of actual behavior to identify anticompetitive situations? A. Profit margins B. Patent information C. Market concentration D. Credit access

Q: Which of the following acts forbids monopolies? A. The Sherman Act B. The Wagner Act C. The MagnusonMoss Act D. The SarbanesOxley Act

Q: United States antitrust laws cannot be applied to foreign corporations doing business in the United States.

Q: The Sherman Act applies to the conduct of American business abroad when that business has a direct effect on American commerce.

Q: The smaller the HerfindahlHirschman Index (HHI), the more concentrated the market.

Q: The failing company doctrine permits a merger to preserve the assets of a firm that would otherwise be lost to the market.

Q: The primary threat to competition arising from vertical mergers is labeled market foreclosure.

Q: Growth by merger is often more expensive than internal growth.

Q: A merger involves the union of two or more enterprises wherein the property of all is transferred to the one remaining firm.

Q: The conglomerate category includes all mergers that are neither horizontal nor vertical.

Q: Private parties commonly use the antitrust laws to sue for treble damages when they believe a merger has harmed them unlawfully.

Q: The greater the HerfindahlHirschman Index (HHI), the more likely the government will be concerned about the merger.

Q: High market concentration often promotes competition.

Q: Market share alone will lead to antitrust action.

Q: Market share, by itself, can establish monopoly power.

Q: A monopoly may be earned or thrust upon a monopolist.

Q: Mergers may produce significant economies of scale.

Q: The Sherman Act prohibits attempts to monopolize as well as monopoly itself.

Q: A situation in which a firm holds the power to control prices and/or exclude competition in a particular market is called an oligopoly.

Q: Identify and explain the elements a plaintiff must prove to establish an illegal tying arrangement.

Q: What is price discrimination? What are the defenses to a Robinson-Patman charge?

Q: In 2000, Microsoft was charged with violating federal antitrust laws by maintaining market dominance through anticompetitive means.

Q: Explain the difference between per se antitrust violations and those analyzed under the rule of reason.

Q: How is the presence of an unlawful price-fixing arrangement established?

Q: 49. How does the law address patent/antitrust conflicts?

Q: Define resale price maintenance.

Q: Which of the following involves selling substantially identical goods at reasonably contemporaneous times to different purchasers at different prices, where the effect may substantially lessen competition or tend to create a monopoly? A. Price discrimination B. Predatory pricing C. Resale price maintenance D. Conscious parallelism

Q: Predatory pricing: A. involves pricing below cost until a competitor drops out and then raising those prices to supracompetitive levels. B. involves selling substantially identical goods at reasonably contemporaneous times to different purchasers at different prices. C. prevents distributors from selling to some classes of customers. D. imposes nonprice restraints including where and to whom products may be resold.

Q: Shaun opens a pastry shop right across the street from his competitor, Jason's pastry shop. To eliminate Jason's competition, Shaun radically lowers prices of his pastries attracting customers to his pastry shop and eventually driving Jason out of business. Which of the following antitrust violations could Shaun be charged with? A. Predatory pricing B. Price discrimination C. Psychological pricing D. Dual pricing

Q: Explain the changing goals of antitrust law.

Q: How does the law address patent/antitrust conflicts?

Q: Which of the following occurs through an exclusive dealing contract? A. The sellers in a market compete to drive prices down and quality up. B. A seller colludes with another seller to jointly restrict their output. C. The sellers in a market agree to divide the market into exclusive territories to reduce competition. D. A buyer commits to deal only with a specific seller.

Q: A(n) _____ is one in which a seller agrees to supply all of a buyer's needs, or a buyer agrees to purchase all of a seller's output, or both. A. exclusive dealing contract B. requirements contract C. tying arrangement D. free rider

Q: By its nature a(n) _____ results in market foreclosure; that is, competitors are denied a source of supply or a market for sale. A. price differential B. exclusive deal C. tying arrangement D. free rider

Q: Manufacturers and distributors often seek to specify the price at which their customers may resell their products, a policy which is referred to as _____. A. resale price maintenance B. horizontal price fixing C. price discrimination D. predatory pricing

Q: Which of the following statements is true of vertical territorial and customer restraints? A. They are a type of price restraint. B. They arise from agreements among competitors. C. They encourage intrabrand competition. D. The rule of reason is to be applied to such restraints.

Q: _____ permits a customer to buy or lease a desired product only if he/she also buys or leases another, less desirable product. A. A tying arrangement B. Price discrimination C. A predatory pricing strategy D. Conscious parallelism

Q: Which of the following is a vertical restraint of trade? A. Horizontal price fixing B. Refusal to deal C. Tying arrangements D. Dividing territories

Q: Which of the following is true of horizontal price fixing? A. Its occurrence need not be proved. B. It is to be resolved under the rule of reason. C. It is imposed by suppliers on their buyers. D. Their mere existence constitutes unlawful conduct.

Q: _____ is fully lawful because competitors have not agreed either explicitly or by implication to follow the same course of action. A. Vertical price fixing B. Bundling C. Horizontal price fixing D. Conscious parallelism

Q: When competitors agree not to deal with a supplier, customer, or another competitor, it is referred to as a _____. A. price differential B. parallel conduct C. tying arrangement D. horizontal group boycott

Q: Which of the following is a difference between vertical restraints and horizontal restraints? A. Vertical restraints, in general, are based on tacit understanding while horizontal restraints, in general, are based on mutual observation. B. Vertical restraints eliminate competition, while horizontal restraints promote competition. C. Vertical restraints are those arising from an agreement among competitors themselves, while horizontal restraints ordinarily are those imposed by suppliers on their buyers. D. Vertical restraints, in general, are resolved under the rule of reason while horizontal restraints, in general, are per se unlawful.

Q: Which of the following statements is true of vertical restraints? A. They typically arise from an agreement among competitors themselves. B. They are to be resolved under the rule of reason. C. They are per se unlawful. D. They tend to drive product prices down and quality up.

Q: Which of the following is a restraint that arises from an agreement among competitors themselves? A) Horizontal restraint of trade B) Franchise tying C) Vertical restraint of trade D) Conscious parallelism

Q: Which of the following is a horizontal restraint of trade? A. Tying arrangements B. Resale price maintenance C. Price fixing D. Free riding

Q: The various horizontal restraints of trade are governed by the _____. A. Robinson-Patman Act B. Sherman Act C. Clayton Act D. Wagner Act

Q: The reasonableness of a restraint of trade is largely established by _____. A. a detailed balancing of the pro- and anticompetitive effects of the situation B. eliminating competition and facilitating high-profile mergers C. an analysis of costs and benefits associated with the existing predatory practices and its effects on the government treasury D. producing circumstantial evidence from participants proving the existence of collusion

Q: Which of the following statements is true of antitrust violation of intellectual property rights? A. The U.S. Supreme Court has ruled that patents should automatically be treated as monopolies. B. Abuse of the market power conferred by a patent must be presumed and need not be proven. C. The presence of intellectual property rights suppresses innovation and investment. D. Antitrust violations of intellectual property do not occur unless some competitive wrong is identified.

Q: When competitors collude, conspire, or agree among themselves, they are engaging in _____. A. horizontal restraints of trade B. resale price maintenance C. free riding D. tying arrangements

Q: Which of the following statements is true of the Clayton Act? A. Injured parties cannot sue for injunctive relief under the Clayton Act. B. The Clayton Act opens participants to criminal penalties in case of any violation of the act. C. The Clayton Act does not provide for criminal law remedies. D. The Clayton Act facilitates tying arrangements.

Q: Which of the following is forbidden under Section 1 of the Sherman Antitrust Act, 1890? A. Monopolization B. Restraints of trade C. Attempts to control D. Conspiracies to monopolize

Q: Section 2 of the Sherman Antitrust Act, 1890 forbids: A. price discrimination. B. monopolization. C. tying arrangements. Answer: B

Q: Which of the following statements is true of the Sherman Antitrust Act, 1890? A. It provides injunctive relief under civil law. B. It does not entail criminal penalties in case of any violations of the act. C. It encourages monopolization. D. It facilitates the practice of interlocking directorates.

Q: Which of the following forbids price discrimination, tying arrangements, mergers restraining commerce or tending to create a monopoly, and interlocking directorates? A. The Clayton Act B. The Sherman Antitrust Act C. The RobinsonPatman Act D. The SarbanesOxley Act

Q: The Federal Trade Commission's primary enforcement device is _____. A. arbitration B. the requirements contract C. imposing criminal penalties D. the cease and desist order

Q: An exclusive dealing contract is one in which defendants have simply observed each others pricing behavior over time, and they are able therefore to anticipate each others future conduct and act accordingly without any direct collusion.

Q: As a result of the existence of an exclusive deal, competitors are denied a source of supply or a market for sale.

Q: Price discrimination involves selling substantially identical goods at reasonably contemporaneous times to different purchasers at different prices.

Q: A seller may resist a RobinsonPatman charge by establishing that the price differential is attributable to cost savings.

Q: Price discrimination involves selling services at reasonably contemporaneous times to different purchasers at different prices, where the effect is to harm competition.

Q: The U.S. Supreme Court has ruled that patents should not automatically be treated as monopolies.

Q: Many businesses in competition meant that none of them could corner economic, political, or social power. Which of the following goals of antitrust law best describes the above statement? A) The preservation of competition B) The preservation of small businesses C) An expression of political radicalism D) The preservation of democracy

Q: Vertical restraints are those arising from an agreement among competitors.

Q: In the 2007 Leegin case, the Supreme Court ruled that agreements specifying minimum resale prices must be analyzed under the rule of reason.

Q: Vertical territorial and customer restraints are to be resolved under the rule of reason.

Q: Tying arrangements are a form of nonprice vertical restraint.

Q: Conscious parallelism, which is allowed under the Sherman Act, arises from an explicit agreement between competitors.

Q: A horizontal group boycott is a situation where competitors agree not to deal with a supplier, customer, or another competitor.

Q: The rule of reason refers to the Supreme Courts position that all restraints of trade are per se unlawful.

Q: A company agrees to restrict sales to the east of the city, and its competitor agrees to restrict sales to the west of the city. This arrangement is lawful under the Sherman Act.

Q: A policy of conscious parallelism is not a violation of the Sherman Act.