Question 1

Which of the following actions could be acceptable if the purpose is to prevent a company from going bankrupt?

Accepted Answer

A)  price-fixing 
B)  resale price maintenance 
C)  price-fixing and setting a price floor 
D)  merger with another firm 
E)  merger with another firm and resale price maintenance 
A)  price-fixing 
B)  resale price maintenance 
C)  price-fixing and setting a price floor 
D)  merger with another firm 
E)  merger with another firm and resale price maintenance

Question 2

In many antitrust cases the definition of the relevant market is the most important issue.The determination of the relevant market often determines the outcome of the entire case,yet there is much subjectivity in the determination of the relevant market.Should there be more rigid guidelines for relevant market determination? Why or why not?

Accepted Answer

It would be impossible to elim

Question 3

Resale price maintenance occurs when:

Accepted Answer

A)  a retailer refuses to lower its price even though competitors have lowered their prices 
B)  a wholesaler refuses to offer volume discounts to its high-volume customers 
C)  a manufacturer sells its products only to those dealers who agree to charge a certain price 
D)  a manufacturer sells its products to its dealers for the same price in all states even though the retail market is much more competitive in some states than in others 
E)  competitors agree to sell their products for the same price 
A)  a retailer refuses to lower its price even though competitors have lowered their prices 
B)  a wholesaler refuses to offer volume discounts to its high-volume customers 
C)  a manufacturer sells its products only to those dealers who agree to charge a certain price 
D)  a manufacturer sells its products to its dealers for the same price in all states even though the retail market is much more competitive in some states than in others 
E)  competitors agree to sell their products for the same price

Question 4

Orange Mist Corporation has been charged by the government with violating the antitrust laws.Orange Mist wants to dispose of this matter without a trial,but it is worried about possible private actions in the future.If Orange Mist wants to minimize its possible future exposure,which of the following is the best way for it to plead?

Accepted Answer

A)  Guilty,because this is not an admission of wrongdoing or liability. 
B)  Guilty,because this plea cannot be used in subsequent private action. 
C)  Nolo contendere,because this plea cannot be used against Orange Mist in a subsequent private action. 
D)  Per se,because this plea cannot be used in a subsequent private action. 
E)  It does not matter because the plea here cannot be used in a subsequent private action in any case. 
A)  Guilty,because this is not an admission of wrongdoing or liability. 
B)  Guilty,because this plea cannot be used in subsequent private action. 
C)  Nolo contendere,because this plea cannot be used against Orange Mist in a subsequent private action. 
D)  Per se,because this plea cannot be used in a subsequent private action. 
E)  It does not matter because the plea here cannot be used in a subsequent private action in any case.

Question 5

A refusal to deal is the same as a group boycott.

Accepted Answer

A) True 
 B)False

Question 6

Section 7 of the Clayton Act gave the federal government the power to prevent anticompetitive mergers.

Accepted Answer

A) True 
 B)False

Question 7

Marvin Airlines is an established airline that is suddenly experiencing competition from a new airline,Cheapflites,in some of its markets.Cheapflites is a no frills airline that has a marketing policy claiming that all of its tickets are fully refundable.Marvin Airlines has rescheduled many of its flights to leave 15 minutes later than the Cheapflites flight for the same route.Prior to the departure of each Cheapflites flight,a Marvin employee goes to the Cheapflites waiting area with a megaphone and announces that they will allow Cheapflites passengers to fly on Marvin for $10 less than the cost of their Cheapflites ticket and get full service as a bonus.Because the Cheapflites tickets are fully refundable,most Cheapflites passengers accept the offer.Under the antitrust and unfair competition laws,which of the following is most likely true?

Accepted Answer

A)  Marvin will not be in violation of any laws unless it has monopoly power. 
B)  Marvin will not be in violation of any laws unless it has agreed with at least one other airline to engage in this activity. 
C)  This is an illegal tying arrangement because Marvin makes its offer only to those people who also have a Cheapflites ticket. 
D)  Marvin is likely in violation of Section 5 of the Federal Trade Commission Act even if it is not in violation of the specific provisions of the antitrust laws. 
E)  Marvin will not be in violation of any laws because seats on a no frills airline would not be considered a substitute for seats on a full-service airline. 
A)  Marvin will not be in violation of any laws unless it has monopoly power. 
B)  Marvin will not be in violation of any laws unless it has agreed with at least one other airline to engage in this activity. 
C)  This is an illegal tying arrangement because Marvin makes its offer only to those people who also have a Cheapflites ticket. 
D)  Marvin is likely in violation of Section 5 of the Federal Trade Commission Act even if it is not in violation of the specific provisions of the antitrust laws. 
E)  Marvin will not be in violation of any laws because seats on a no frills airline would not be considered a substitute for seats on a full-service airline.

Question 8

In determining the lawfulness of a merger,which of the following factors need not be shown?

Accepted Answer

A)  an actual lessening of competition 
B)  the relevant product market 
C)  the relevant geographic market 
D)  the likelihood of a substantially lessening of competition or the tendency to create a monopoly 
A)  an actual lessening of competition 
B)  the relevant product market 
C)  the relevant geographic market 
D)  the likelihood of a substantially lessening of competition or the tendency to create a monopoly

Question 9

To be guilty of monopolization,the defendant must:

Accepted Answer

A)  possess monopoly power 
B)  have obtained the monopoly power by some improper act or be abusing the monopoly power 
C)  must be part of a conspiracy,combination,or contract 
D)  A,B,and C 
E)  A and B only 
A)  possess monopoly power 
B)  have obtained the monopoly power by some improper act or be abusing the monopoly power 
C)  must be part of a conspiracy,combination,or contract 
D)  A,B,and C 
E)  A and B only

Question 10

All federal criminal antitrust enforcement is done by the Justice Department.

Accepted Answer

A) True 
 B)False

Question 11

Under the rule of reason for violations under the Sherman Act,certain restraints of trade can be legal in some circumstances and illegal in others.

Accepted Answer

A) True 
 B)False

Question 12

Great North Refining distributes its products to wholesalers in 24 states.It usually charges the same prices to all its customers.In Kansas,where there are several competing distributors with overlapping geographical market areas,it has sold some products at lower prices to certain distributors in order to meet prices that a Kansas refiner has offered to these distributors.Whenever one of these distributors offers proof to Great North of a lower price on a similar product from the Kansas refiner,Great North meets the price of the Kansas refiner.Heartland Oil Distributors purchases products regularly from Great North Refining,but has not done business with the Kansas refinery for several years because of a previous dispute.Heartland has tried to get the same lower prices from Great North that the other Kansas distributors have been getting,but Great North has refused to give the lower price unless Heartland can submit a price quote from the Kansas refiner.Discuss Great North's liability for price discrimination.

Accepted Answer

The lower price to Kansas distributors w

Question 13

Only a seller may be held liable under the price discrimination laws.

Accepted Answer

A) True 
 B)False

Question 14

If a textbook publisher acquired a paper mill,it would be a backward vertical merger.

Accepted Answer

A) True 
 B)False

Question 15

Most of the major antitrust statutes provide for both civil and criminal penalties.

Accepted Answer

A) True 
 B)False

Question 16

In a Sherman Act Section 2 action,a court need not define both the relevant geographic market and the relevant product or service market.

Accepted Answer

A) True 
 B)False

Question 17

A manufacturer distributes his products to retailers.However,the manufacturer requires that the retailers charge their customers a price set by the manufacturer.Anyone who does not charge these prices is terminated as a distributor.This action is:

Accepted Answer

A)  horizontal price-fixing 
B)  a horizontal market division 
C)  vertical price-fixing 
D)  legal,because it is judged by the rule of reason 
A)  horizontal price-fixing 
B)  a horizontal market division 
C)  vertical price-fixing 
D)  legal,because it is judged by the rule of reason

Question 18

A corporation may be fined up to $100 million per violation of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 19

Two supermarkets agree to charge $3.50 for a gallon of milk,which is a fair price in the locality.This action is:

Accepted Answer

A)  horizontal price-fixing 
B)  a horizontal market division 
C)  vertical price-fixing 
D)  a group boycott 
E)  legal,because the price agreed upon was fair 
A)  horizontal price-fixing 
B)  a horizontal market division 
C)  vertical price-fixing 
D)  a group boycott 
E)  legal,because the price agreed upon was fair

Question 20

Which of the following is not a defense to a price discrimination charge?

Accepted Answer

A)  cost justification 
B)  failing company 
C)  changing conditions 
D)  meeting the competition 
E)  A and C only 
A)  cost justification 
B)  failing company 
C)  changing conditions 
D)  meeting the competition 
E)  A and C only

Exam 46: Antitrust Law and Unfair Trade Practices

Which of the following actions could be acceptable if the purpose is to prevent a company from going bankrupt?

Resale price maintenance occurs when:

A refusal to deal is the same as a group boycott.

Section 7 of the Clayton Act gave the federal government the power to prevent anticompetitive mergers.

In determining the lawfulness of a merger,which of the following factors need not be shown?

To be guilty of monopolization,the defendant must:

All federal criminal antitrust enforcement is done by the Justice Department.

Under the rule of reason for violations under the Sherman Act,certain restraints of trade can be legal in some circumstances and illegal in others.

Only a seller may be held liable under the price discrimination laws.

If a textbook publisher acquired a paper mill,it would be a backward vertical merger.

Most of the major antitrust statutes provide for both civil and criminal penalties.

In a Sherman Act Section 2 action,a court need not define both the relevant geographic market and the relevant product or service market.

A manufacturer distributes his products to retailers.However,the manufacturer requires that the retailers charge their customers a price set by the manufacturer.Anyone who does not charge these prices is terminated as a distributor.This action is:

A corporation may be fined up to $100 million per violation of the Sherman Act.

Two supermarkets agree to charge $3.50 for a gallon of milk,which is a fair price in the locality.This action is:

Which of the following is not a defense to a price discrimination charge?

Legal Heritage and the Information Age

Court Systems and Jurisdiction

Judicial, Alternative, and Online Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Strict Liability and Product Liability

Intellectual Property and Cyber Piracy

Criminal Law and Cyber Crimes

Nature of Traditional and E-Contracts

Agreement

Consideration and Promissory Estoppel

Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

Internet Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Sales and Lease Warranties

Creation of Negotiable Instruments

Transferability and Holder In Due Course

Liability,Defenses and Discharge

Checks, the Banking System, and E-Money

Creditor's and Debtor's Rights

Secured Transactions and Electronic Filing

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, Agents, and Independent Contractors

Employment,Worker Protection,and Immigration Laws

Labor Law and Collective Bargaining

Equal Opportunity in Employment

Small Businesses, Entrepreneurs, and General Partnerships

Limited Partnerships and Limited Liability Limited Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Franchises and Special Forms of Business

Investor Protection and Online Securities Transactions

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection and Global Warming

Personal Property and Bailment

Real Property

Landlord Tenant Law and Land Use Regulation

Insurance

Accountants' Liability

Wills, Trusts, and Elder Law

Family Law

International and World Trade Law

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