Question 1

Any agreement among competitors to artificially fix prices or restrict output is a per se violation of Section 1 of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 2

Consumers benefit when producers work to develop better products that can be sold at lower prices to beat the competition.

Accepted Answer

A) True 
 B)False

Question 3

Blu-ray producers cannot jointly lobby Congress to change the copyright laws without being held liable for attempting to restrain trade.

Accepted Answer

A) True 
 B)False

Question 4

Under a contract, Oil Shale Corporation forbids Petro Inc., a wholesale buyer of Oil Shale's products, to purchase products from the seller's competitors. This is prohibited

Accepted Answer

A)  under any circumstances. 
B)  if its effect is to stabilize the relevant market. 
C)  if its effect is to substantially lessen competition. 
D)  if its purpose is to create a monopoly. 
A)  under any circumstances. 
B)  if its effect is to stabilize the relevant market. 
C)  if its effect is to substantially lessen competition. 
D)  if its purpose is to create a monopoly.

Question 5

Establishing the relevant product market is a key issue in monopolization cases because the way a market is defined can determine whether a firm has monopoly power.

Accepted Answer

A) True 
 B)False

Question 6

Any contract, combination in the form of a trust, or conspiracy to restrain trade and commerce can be declared illegal under the antitrust laws.

Accepted Answer

A) True 
 B)False

Question 7

Mountain Crest Inc. makes and distributes its branded products to authorized dealers. To prevent price-cutting by dealers in direct competition, the firm imposes limits on where each dealer can sell the products. This is

Accepted Answer

A)  a territorial restriction. 
B)  a trade association. 
C)  smart marketing. 
D)  a price-fixing agreement. 
A)  a territorial restriction. 
B)  a trade association. 
C)  smart marketing. 
D)  a price-fixing agreement.

Question 8

Only the U.S. Department of Justice can prosecute violations of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 9

Fertile Acres Inc., Growers Farm Co-op, and Harvest Orchards agree to exchange information, conduct an advertising campaign, and set certain regulatory standards to govern their operations. This association is

Accepted Answer

A)  a deal that neither restrains trade nor harms competition. 
B)  not within the scope of the Sherman Act. 
C)  a per se violation of antitrust law. 
D)  subject to analysis under the rule of reason. 
A)  a deal that neither restrains trade nor harms competition. 
B)  not within the scope of the Sherman Act. 
C)  a per se violation of antitrust law. 
D)  subject to analysis under the rule of reason.

Question 10

A firm may be deemed a monopolist, even though it is not the only seller in a market, because what matters is size in relation to the market.

Accepted Answer

A) True 
 B)False

Question 11

Every agreement concerned with trade, and every regulation of trade, restrains. The test of legality under the antitrust laws, according to the rule of reason, is whether the restraint

Accepted Answer

A)  is blatantly, inherently anticompetitive. 
B)  has a substantial effect on interstate commerce. 
C)  merely regulates and thereby promotes competition. 
D)  suppresses or destroys competition. 
A)  is blatantly, inherently anticompetitive. 
B)  has a substantial effect on interstate commerce. 
C)  merely regulates and thereby promotes competition. 
D)  suppresses or destroys competition.

Question 12

The power to control the market price of a product is market power.

Accepted Answer

A) True 
 B)False

Question 13

Online Media Inc. bundles its products so that consumers are forced to pay for access to some sites that they do not want in order to obtain access to sites that they do want. A court will likely rule that the bundling does not violate the rule of reason if it

Accepted Answer

A)  is the most restrictive means for the firm to achieve its purpose. 
B)  is fully within the firm's ability to achieve. 
C)  does not injure competition. 
D)  suppresses or destroys competition. 
A)  is the most restrictive means for the firm to achieve its purpose. 
B)  is fully within the firm's ability to achieve. 
C)  does not injure competition. 
D)  suppresses or destroys competition.

Question 14

Snowboards Inc. refuses to sell its products to Timber Winter Sports Stores, Inc., a retail snowboard dealership. This violates Section 2 of the Sherman Act if Snowboards has monopoly power and

Accepted Answer

A)  none of the choices. 
B)  Timber has or is likely to acquire monopoly power. 
C)  the refusal is unilateral. 
D)  the refusal has an anticompetitive effect on the market. 
A)  none of the choices. 
B)  Timber has or is likely to acquire monopoly power. 
C)  the refusal is unilateral. 
D)  the refusal has an anticompetitive effect on the market.

Question 15

Proving an antitrust violation requires showing a misuse of market power.

Accepted Answer

A) True 
 B)False

Question 16

To drive its competitors out of a certain geographic segment of its market, Drones, Inc., sets the prices of its products below cost for the buyers in that area. This is

Accepted Answer

A)  price-fixing. 
B)  smart marketing. 
C)  predatory pricing. 
D)  price discrimination. 
A)  price-fixing. 
B)  smart marketing. 
C)  predatory pricing. 
D)  price discrimination.

Question 17

Components Inc., a maker of vehicle parts, refuses to sell to DIY Repair Inc., a national vehicle service firm. The maker convinces Engine Parts Company, a competitor, to do the same. This is

Accepted Answer

A)  a group boycott. 
B)  a tying arrangement. 
C)  a trade association. 
D)  a market division. 
A)  a group boycott. 
B)  a tying arrangement. 
C)  a trade association. 
D)  a market division.

Question 18

Edibles Inc. and Food Stuff Corporation are competitors. Each firm has capital, surplus, and undivided profits in excess of $40 million and competitive sales of more than $5 million. Gina and Hal serve as directors on both firms' boards. Under the Clayton Act's restriction concerning interlocking directorates, Gina and Hal are

Accepted Answer

A)  liable for failing to comply. 
B)  not liable because the firms are likely to continue to compete. 
C)  not liable because the firms' officers conduct the competitive activities. 
D)  not liable because the firms' shareholders can affect company policies. 
A)  liable for failing to comply. 
B)  not liable because the firms are likely to continue to compete. 
C)  not liable because the firms' officers conduct the competitive activities. 
D)  not liable because the firms' shareholders can affect company policies.

Question 19

Because commerce operates more efficiently when competitors cooperate, Section 1 of the Sherman Act permits rivals to consolidate market power.

Accepted Answer

A) True 
 B)False

Question 20

Pump Makers Inc. makes pumps for fire trucks and conditions shipments of its products to Quality Motors Corporation-a maker of fire trucks-on Quality's agreement to buy additional pumps only from Pump Makers. This is

Accepted Answer

A)  an exclusive-dealing contract. 
B)  a tying arrangement. 
C)  price discrimination. 
D)  a unilateral refusal to deal. 
A)  an exclusive-dealing contract. 
B)  a tying arrangement. 
C)  price discrimination. 
D)  a unilateral refusal to deal.

Exam 38: Antitrust Law and Promoting Competition

Any agreement among competitors to artificially fix prices or restrict output is a per se violation of Section 1 of the Sherman Act.

Consumers benefit when producers work to develop better products that can be sold at lower prices to beat the competition.

Blu-ray producers cannot jointly lobby Congress to change the copyright laws without being held liable for attempting to restrain trade.

Under a contract, Oil Shale Corporation forbids Petro Inc., a wholesale buyer of Oil Shale's products, to purchase products from the seller's competitors. This is prohibited

Establishing the relevant product market is a key issue in monopolization cases because the way a market is defined can determine whether a firm has monopoly power.

Any contract, combination in the form of a trust, or conspiracy to restrain trade and commerce can be declared illegal under the antitrust laws.

Mountain Crest Inc. makes and distributes its branded products to authorized dealers. To prevent price-cutting by dealers in direct competition, the firm imposes limits on where each dealer can sell the products. This is

Only the U.S. Department of Justice can prosecute violations of the Sherman Act.

Fertile Acres Inc., Growers Farm Co-op, and Harvest Orchards agree to exchange information, conduct an advertising campaign, and set certain regulatory standards to govern their operations. This association is

A firm may be deemed a monopolist, even though it is not the only seller in a market, because what matters is size in relation to the market.

Every agreement concerned with trade, and every regulation of trade, restrains. The test of legality under the antitrust laws, according to the rule of reason, is whether the restraint

The power to control the market price of a product is market power.

Online Media Inc. bundles its products so that consumers are forced to pay for access to some sites that they do not want in order to obtain access to sites that they do want. A court will likely rule that the bundling does not violate the rule of reason if it

Snowboards Inc. refuses to sell its products to Timber Winter Sports Stores, Inc., a retail snowboard dealership. This violates Section 2 of the Sherman Act if Snowboards has monopoly power and

Proving an antitrust violation requires showing a misuse of market power.

To drive its competitors out of a certain geographic segment of its market, Drones, Inc., sets the prices of its products below cost for the buyers in that area. This is

Components Inc., a maker of vehicle parts, refuses to sell to DIY Repair Inc., a national vehicle service firm. The maker convinces Engine Parts Company, a competitor, to do the same. This is

Because commerce operates more efficiently when competitors cooperate, Section 1 of the Sherman Act permits rivals to consolidate market power.

Pump Makers Inc. makes pumps for fire trucks and conditions shipments of its products to Quality Motors Corporation-a maker of fire trucks-on Quality's agreement to buy additional pumps only from Pump Makers. This is

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