Q&A Hero

Q: Rally Speedboat Corporation refuses to sell its products to Super Weekends, Inc., a recreational water products dealership. This is a. an exclusive-dealing contract. b. a horizontal market division. c. attempted monopolization. d. a unilateral refusal to deal.

Q: To acquire monopoly power in its market, Perfect Plastics, Inc., sets its prices lower than its competitors. Under the Sherman Act, this is a. a per se violation. b. a violation if its competitors make similar deals. c. a violation if it thereby acquires monopoly power. d. not a violation.

Q: Master Manufacturing Corporation has exclusive control over the market for its product. Under the Sherman Act, this is a. a per se violation. b. a violation if it acquired this power through "business acumen." c. a violation if it acquired this power through "anticompetitive means." d. not a violation.

Q: A suit is filed against Dormroom Furniture Unlimited, Inc., alleging that the firm has committed the offense of monopolization. To determine whether Dormroom has committed this offense, the court will consider the extent of Dormroom's market power and a. how Dormroom acquired its power. b. how Dormroom makes its products. c. Dormroom's customers. d. Dormroom's suppliers.

Q: Listen Up! Corporation books and promotes concerts and other entertainment events, for which Listen Up! also sells tickets. In weighing a challenge to Listen Up!'s "monopolistic" ticket prices, a court looks at the relevant geographic market. This encompasses a. only areas in which Listen Up! does not have monopoly power. b. only areas in which Listen Up! has monopoly power. c. the area in which Listen Up! and its competitors sell, and their customers buy, the tickets. d. the entire United States in all cases.

Q: A suit is filed against Adroit Drilling Tools Corporation, alleging that the firm committed the offense of monopolization. To determine whether Adroit has monopoly power requires looking at a. the definition of monopoly in the Sherman Act. b. Adroit's size alone. c. Adroit's production methods and marketing techniques. d. the relevant market.

Q: Imperio Caffeine Corporation makes and sells coffee under a variety of brand names. Imperio wants to merge with Java Company, its main competitor. In weighing a challenge to the deal, a court looks at the relevant product market. This most likely includes coffee and a. no other products. b. products that are not identical but are related, such as spin-offs. c. products that are sometimes substituted for coffee. d. products with identical attributes only.

Q: Marvin is a very good businessman. He starts Marvin's Bike Company in the small town of Wheatland, South Dakota. There is one other bike store in Wheatland. Through good business management, Marvin's Bike Company obtains a great deal of market power in Wheatland. This acquisition of monopoly power is a. a per se violation of Section 1 of the Sherman Act. b. an illegal restraint on trade. c. not an antitrust violation. d. a per se violation of Section 2 of the Sherman Act.

Q: Gourmet Foods, Inc., requires all distributors of its products to sell them at a specified minimum price. Under the Sherman Act, this is a violation a. if the anticompetitive effects outweigh the competitive benefits. b. if the competitive benefits outweigh the anticompetitive effects. c. under any circumstances. d. under no circumstances.

Q: Spa Selectiva Company makes and sells beauty salon supplies. By selling its product at prices substantially below the normal cost of production, Spa Selectiva hopes to drive its competitors from the market. This is a. market power. b. predatory pricing. c. price discrimination. d. price-fixing.

Q: A trade association a. is always a per se violation of Section 1 of the Sherman Act. b. may be legal if it is sufficiently beneficial to both the association and the public. c. is an innovative, legally efficient approach to doing business. d. always creates illegal territorial or customer restrictions.

Q: Organic Cheeses, Inc., Fine & Fresh Foods Company, and Healthy Whole Foods, Inc. organize together to exchange information and share advertising. This is an example of a a. trade association. b. resale price maintenance agreement. c. monopoly. d. territorial restriction.

Q: Lightning Cycles, Inc., makes Lightning-brand motorcycles and accessories, which are distributed to authorized dealers, including Macho Motors, Inc. Macho operates dealerships in several locations. Lightning imposes restrictions on Macho to limit the areas in which they sell the bikes and insulate other dealers from direct competition. This is a. a territorial restriction. b. a resale price maintenance agreement. c. a refusal to deal. d. a price-fixing agreement.

Q: Some agreements are so blatantly and substantially anticompetitive that they are deemed illegal per se under Section 1 of the Sherman Act. Which of the following is not a per se violation? a. A price-fixing agreement b. A group boycott c. A trade association d. A market division

Q: Edgy Engine Components, Inc., a maker of vehicle parts, refuses to sell to Fidgety Fix-It, Inc., a national vehicle service firm. Edgy Engine convinces Greasy Motor Parts Company, a competitor, to do the same. This is a. a group boycott. b. a market division. c. a joint venture. d. an exclusive-dealing contract.

Q: Gulf Air, Inc., is the major wholesale distributor of software in the state of Florida. Its closest competitor is Fluid Systems Company, another Florida firm. The two firms agree that Gulf Air will operate in south Florida and Fluid Systems will operate in north Florida. This is a. a group boycott. b. a market division. c. a joint venture. d. an exclusive-dealing contract.

Q: Cardio, Inc., makes and sells Drawdown, the most prescribed name-brand heart medication. Emitate Corporation has the potential to make a generic version of the same drug. A court would most likely rule that the agreement between Cardio and Emitate is a. a deal that neither restrains trade or harms competition. b. a legal restraint of trade. c. a per se violation of the Sherman Act. d. subject to analysis under the rule of reason.

Q: Cardio, Inc., makes and sells Drawdown, the most prescribed name-brand heart medication. Emitate Corporation has the potential to make a generic version of the same drug. Cardio pays Emitate not to sell its product. This is a. a customer restriction. b. a joint venture. c. an exclusive-dealing contract. d. a price-fixing agreement.

Q: A court deems an agreement between Silver Saddles Saddlery and Time Tested Tack, Inc. to be a per se violation of the Sherman Act. The court is a. prevented from determining whether the agreement's benefits outweigh its anticompetitive effects. b. required to unanimously decide whether the agreement's benefits outweigh its anticompetitive effects. c. required to apply the rule of reason. d. required to issue a formal complaint against Silver Saddles and Time Tested Tack.

Q: When applying the rule of reason to determine whether an agreement violates Section 1 of the Sherman Act, a court will not consider a. the purpose of the agreement. b. the parties' market ability to implement the agreement. c. the effect of the agreement on international trade. d. the potential effect of the agreement on competition.

Q: Thermo Gas, Inc., and Uno Oil Corporation refine and sell gasoline and other petroleum products. To limit the supply of gas on the market and thereby raise prices, Thermo Gas and Uno Oil agree to buy "excess" supplies from dealers and "dispose" of it. This is a. a deal that neither restrains trade or harms competition. b. a legal restraint of trade. c. a per se violation of the Sherman Act. d. subject to analysis under the rule of reason.

Q: To fall under the Sherman Act, an activity must a. substantially affect interstate commerce. b. involve monopolization. c. promote competition. d. involve international trade.

Q: North Mining Company and South Excavation Company agree to abide by the decisions of East Coast Financial Corporation as to their respective levels of production, markets, and prices, effectively reducing competition and increasing profits. This is most likely a. a common, legal, time-honored type of business arrangement. b. an illegal restraint on trade. c. an innovative, legally efficient approach to doing business. d. an outdated, but legal business trust.

Q: Congress enacts a statute to outlaw a specific type of anticompetitive business agreement. Like other laws that regulate economic competition, this law is referred to as a. a federal trade commission act. b. an antitrust law. c. an interstate commerce act. d. a suppressive restraint on trade.

Q: Cooperative research by small-business firms is exempt from antitrust law.

Q: Insurance companies are exempt from antitrust laws whenever state regulation exists.

Q: Labor unions can organize and bargain without violating antitrust law.

Q: A divestiture is an order to a company to cease, or divest itself of, its anticompetitive conduct.

Q: No person may be a director for two competing corporations at the same time.

Q: Market concentration refers to the number of firms in the market.

Q: In determining the legality of a merger, a crucial consideration is market concentration.

Q: Conditioning the sale of one product on the purchase of another is an exclusive-dealing contract.

Q: Under an exclusive-dealing contract, a seller promises a buyer a certain territory in which the buyer will have no direct competition.

Q: Charging different prices to different buyers for identical goods is price discrimination.

Q: The Clayton Act prohibits certain classes of price discrimination.

Q: A single seller acting unilaterally is free to deal, or not to deal, with anyone it chooses.

Q: The offense of monopolization does not require the intent to monopolize.

Q: The Internet is changing the notion of the size and limits of a relevant geographic market.

Q: The possession of monopoly power alone does not constitute the offense of monopolization.

Q: For products that are sold nationwide, the relevant geographic market encompasses the entire United States.

Q: Size alone does not determine whether a firm is a monopoly.

Q: Monopoly power is a minor amount of market power.

Q: The primary measure of monopoly power is a competitor's assessment of the acts of a firm under review.

Q: Monopoly power may be proved by evidence that a firm used its power to control prices.

Q: Predatory pricing involves selling a product at prices substantially above the fair market value.

Q: Section 1 of the Sherman Act condemns monopolization.

Q: A trade association practice or agreement that restrains trade is analyzed under the rule of reason.

Q: Resale price maintenance agreements are subject to analysis under the rule of reason.

Q: Territorial and consumer restrictions are per se violations.

Q: A market division by class of customer between rival firms violates antitrust law.

Q: A group boycott is not a per se violation.

Q: A price-fixing agreement that is reasonable does not violate antitrust law.

Q: A price-fixing agreement is an agreement by two or more sellers to boycott a particular person or firm.

Q: Grapple Market Share Corporation would like to know what information federal agencies have about Grapple's operations, so that the firm will know what its competitors may be able to learn about it. Can Grapple require the agencies to disclose whatever information they may have concerning it? If so, how should the firm make its request? What federal law applies? Is any information exempt?

Q: Administrative agencieslike the Securities and Exchange Commission, the Federal Trade Commission, and the Food and Drug Administrationmake rules. What are the two basic types of rules called, and how binding are they? What must an administrative rule NOT do?

Q: The Regulatory Flexibility Act has helped reduce record-keeping burdens for Hometown Gas Company and other small business firms in the area of a. accounting practices. b. asset acquisition. c. hazardous waste management. d. tax reporting.

Q: With some exceptions, every portion of every meeting of the Federal Reserve System Board of Governors and other federal administrative agencies must be open to public observation under a. no federal or state law. b. the Freedom of Information Act. c. the Government in the Sunshine Act. d. the Public Accountability Act.

Q: A failure of the Federal Bureau of Investigation to comply with a request under the Freedom of Information Act (FOIA) may be challenged in a. a federal district court. b. a hearing before the U.S. Freedom of Information Agency. c. a meeting with Congress's FOIA subcommittee. d. a special conference with the president of the United States.

Q: Beck seeks information about Donatello and other well-known businesspersons under the Freedom of Information Act. To obtain the information, Beck must a. agree not to reveal any trade secrets. b. reasonably describe the information. c. get a court order. d. have the businesspersons' permission.

Q: After notice-and-comment rulemaking, the U.S. Bureau of Land Management (BLM) issues a new rule and applies it to Clearcut Timber Company. Clearcut appeals the application to a federal court. The court will most likely defer to the BLM's interpretation of a. the facts and the law. b. the agency's authority. c. procedural requirements. d. the Constitution.

Q: In reviewing the actions of the U.S. Office of Nuclear Energy and other agencies, the courts a. are usually reluctant to review questions of fact. b. rarely defer to the technical expertise of administrative agencies. c. often rule on the merits of policy determinations. d. never defer to an agency's interpretation of law.

Q: Guard Personnel Company is charged with using hiring practices that do not meet requirements set by the Transportation Safety Administration (TSA). The administrative law judge orders Guard to comply with the TSA's regulations. Guard may a. appeal to the commission that governs the TSA. b. appeal to Congress, which created the TSA. c. appeal to a different, separate agency. d. ignore the order.

Q: Labor Recruiters, Inc., has been ordered to appear at a hearing before an administrative law judge of the National Labor Relations Board. A significant difference between a trial and an administrative hearing is that a. attorneys are not allowed to attend administrative hearings. b. clients are not allowed to communicate with their attorneys during administrative hearings. c. hearsay can be introduced as evidence in an administrative hearing. d. the burden of proof is on the charged party to prove innocence.

Q: Nursing Home Care Company is charged with violating a rule of the Social Security Administration. Most likely, Nursing Home Care will be required to appear at a hearing presided over by a. a federal appellate court judge. b. a federal district court judge. c. an administrative law judge. d. a U.S Marshal.

Q: The Federal Emergency Management Agency (FEMA) discovers that Goodnuff Trailers, Inc., is violating a FEMA regulation. If this situation is resolved like most such disputes, the outcome will be a. a negotiated settlement. b. a trial and a fine. c. a trial and an appeal to a higher authority. d. a trial and the dissolution of the business.

Q: The U.S. Mine Safety Administration conducts searches of certain businesses. This agency and other administrative agencies can conduct warrantless searches in a. all industries. b. highly regulated industries. c. no industries. d. newly regulated industries only.

Q: The functions of the Social Security Administration, like those of other administrative agencies, include a. adjudication. b. declaration. c. enunciation. d. pronunciation.

Q: The Nuclear Regulatory Commission (NRC) files a complaint against General Construction Corporation (GCC). GCC may want to settle the dispute, before formal adjudicatory proceedings begin, to avoid a. appearing uncooperative. b. eliminating the need for additional proceedings. c. rectifying the problem to the NRC's satisfaction. d. saving the expense of formal proceedings and later appeals.

Q: Caleb is a witness in a controversy involving the U.S. Drug Enforcement Administration. Caleb can be compelled to appear before an administrative law judge if he is served with a. an order for specific performance. b. a rule for parol evidence. c. a subpoena. d. a politely worded request.

Q: The Internal Revenue Service (IRS) wants to seize certain documents of Monetary Propriety, Inc. Whether it is permissible for the IRS to request or seize the documents depends on whether the documents are a. incriminating. b. relevant. c. technical. d. valuable.

Q: The U.S. Patent and Trademark Office (USPTO) wants to review certain records of Verity Corporation. The USPTO can legitimately gain access to the records through a. agency coercion. b. infiltrating Verity's computers without the firm's knowledge. c. public comment. d. Verity's consent.

Q: The Food and Drug Administration (FDA) is investigating reports that Caplets Pharmaceutical Corporation is putting potentially harmful additives in Doze, a new pain-relief medication. The FDA's demands for particular documents from Caplets a. must be specific and adequately describe the material being sought. b. must be non-specific so an incriminating item is not overlooked. c. must be general so as to force an uncooperative party's compliance. d. may, but need not, be specific because the FDA is a federal agency.

Q: The Consumer Product Safety Commission (CPSC) wants Monster Toy Company to produce certain records for review. To obtain the records, the CPSC will issue a. an order for specific performance. b. a rule for parol evidence. c. a formal complaint. d. a subpoena.

Q: The U.S. Citizenship and Immigration Service issues a rule. Like the rules of other federal administrative agencies, this rule is compiled in a. the Administrative Register of the Federal Government. b. the Code of Federal Regulations. c. the Federal Rules of Civil Procedure. d. the United States Code.

Q: The U.S. Fish and Wildlife Service utilizes notice-and-comment rulemaking. This involves a period during which a. judges, legislators, and the president are asked about a proposed rule. b. potential violators of a proposed rule are notified and publicized. c. the administrators "notice" a problem and "comment" on it. d. the public is asked to comment on a proposed rule.

Q: The Securities and Exchange Commission decides to create a new rule relating to the dissemination of material nonpublic information through corporate Web sites. The first step is a. compile the rule with others in the Code of Federal Regulations. b. conduct an on-site inspection. c. publish a notice of the proposed rulemaking. d. solicit public comment.

Q: To notify the public of a proposed rule, the Food Safety and Inspection Service, like other federal agencies, publishes the proposal in a. the news media. b. a trade journal available to members of the industry. c. the Federal Register. d. an office memo that employees are free to take home.

Q: Before adopting new regulations to govern Internet-based phone services, the Federal Communications Commission may not a. hold hearings to acquire facts pertinent to the proposed rules. b. ignore the Administrative Procedure Act to streamline proceedings. c. order manufacturers to provide certain documents. d. solicit testimony from interest groups and consumers.

Q: Freight Transport Company is subject to a decision by the National Labor Relations Board. Freight Transport appeals the decision, arguing that it is arbitrary and capricious. This could mean that the decision a. followed a consideration of legally appropriate factors. b. justifiably changed the agency's prior policy. c. was accompanied by a rational explanation. d. was plainly contrary to the evidence.

Q: Pure Water Company is subject to a decision by the Environmental Protection Agency. Pure Water appeals the decision, arguing that it is arbitrary and capricious. This could mean that the decision a. changed the agency's prior policy without justification. b. followed a consideration of all relevant factors. c. was accompanied by a rational explanation. d. was plainly warranted by the evidence.