Question 1

Precision Parts Corporation and Aligned Gears, Inc. are competitors selling certain machine parts that are otherwise generally unattainable in their geographic market. This market includes the states of Minnesota, North Dakota, and South Dakota. Precision Parts and Aligned Gears agree that Precision Parts will no longer sell in Minnesota and that Aligned Gears will no longer sell in North and South Dakota. Have Precision Parts and Aligned Gears violated any antitrust law? If so, which one? Explain. If they had divided their market by type of customer rather than geographic area, would the result be the same? Why or why not?

Accepted Answer

The answer of Precision Parts Corporation and Aligned Gears, Inc....

Question 2

The rule of reason represents a more flexible economic analysis of agreements among competitors than the rigid application of a per se standard.

Accepted Answer

A) True 
 B)False

Question 3

A price-fixing agreement or other anticompetitive agreement to control a portion of U.S. markets cannot be held to be a per se violation of the antitrust laws if the agreement involves a foreign firm.

Accepted Answer

A) True 
 B)False

Question 4

Cosmétique Inc. makes and sells cosmetics and related products. By selling its goods at prices substantially below the normal cost of production, the firm hopes to drive its competitors from the market. This is

Accepted Answer

A)  market power pricing. 
B)  predatory pricing. 
C)  price discrimination. 
D)  price-fixing.

Question 5

Because market power arises from access to consumer data, collecting such information is an antitrust violation.

Accepted Answer

A) True 
 B)False

Question 6

Power Inc. and QualGas Corporation refine and sell natural gas. To limit the supply on the market and thereby raise prices, Power and QualGas agree to buy "excess" supplies from dealers and "dispose" of it. This is

Accepted Answer

A)  a deal that neither restrains trade or harms competition. 
B)  not within the scope of the Sherman Act. 
C)  a per se violation of the Sherman Act. 
D)  subject to analysis under the rule of reason.

Question 7

Battery Corporation's production, distribution, and marketing methods are unique. Its capital value and size are greater than its competitors. A suit is filed against the firm, alleging the offense of monopolization. To determine whether Battery has monopoly power requires looking at

Accepted Answer

A)  the price of a share of the firm's stock. 
B)  the corporation's size alone. 
C)  the business's production methods and marketing techniques. 
D)  the relevant market.

Question 8

Competition is not necessarily diminished solely as a result of market concentration.

Accepted Answer

A) True 
 B)False

Question 9

Only the Federal Trade Commission can enforce the Clayton Act.

Accepted Answer

A) True 
 B)False

Question 10

Because a single seller is free to deal with whomever it wishes, the seller's unilateral refusal to deal cannot violate Section 2 of the Sherman Act.

Accepted Answer

A) True 
 B)False

Question 11

Expressly exempt from antitrust laws because it is not interstate commerce, according to the United Supreme Court, is

Accepted Answer

A)  digital streaming. 
B)  video production. 
C)  professional football. 
D)  professional baseball.

Question 12

Under what circumstances would Quality Market, a small store in Rustic, an isolated town, be considered a monopoly? If Quality Market is a monopoly, is it in violation of antitrust law?

Accepted Answer

The answer of Under what circumstances would Quality Market, a...

Question 13

Two Chinese firms, Wong Ltd. and Xiang Ltd., engage in a conspiracy to control the distribution of certain goods in global markets. This may violate U.S. antitrust laws

Accepted Answer

A)  under no circumstances. 
B)  if the conspiracy has a substantial effect on U.S. or foreign commerce. 
C)  if the conspiracy has a substantial effect on U.S. and foreign commerce. 
D)  if the conspiracy has a substantial effect on U.S. commerce only.

Question 14

Bio Med Corporation makes and sells Curative, the most prescribed name-brand pain-relief medication. Drugs Inc. has the potential to make a generic version of the same drug. Bio Med agrees to pay Drugs not to make or sell the generic. This agreement is most likely

Accepted Answer

A)  a deal that neither restrains trade or harms competition. 
B)  not within the scope of the Sherman Act. 
C)  a per se violation of the Sherman Act. 
D)  subject to analysis under the rule of reason.

Question 15

Four grocery stores account for 80 percent of the retail food sales in Metro City. Two of the stores want to merge. In determining whether the merger violates the Clayton Act, the most crucial factor is

Accepted Answer

A)  the market shares of the firms in their market. 
B)  the market value of the firms' shares in the stock market. 
C)  the comparative value of each store in a market for their sale. 
D)  the total value of the market in relation to the stock for sale in the stores.

Question 16

Ranch Supplies Company believes that its chief competitor Stock & Equipment Inc. engages in anticompetitive behavior in an attempt to drive Ranch Supplies out of the market. Under the Clayton Act, Ranch Supplies can sue Stock & Equipment for a violation of

Accepted Answer

A)  none of the choices. 
B)  the Clayton Act only. 
C)  any of the federal antirust laws. 
D)  the Sherman Act only.

Question 17

To reduce marketing costs and raise prices, competitors can divide up marketing territories or customers without violating antitrust law.

Accepted Answer

A) True 
 B)False

Question 18

Dig Inc. is the major wholesale distributor of heavy equipment in six states. Dig's closest competitor is Excavator Company. The two firms agree that Dig will operate in four of the states and Excavator in the other two. This is

Accepted Answer

A)  a group boycott. 
B)  a market division. 
C)  a price-fixing agreement. 
D)  a trade association.

Question 19

Any conspiracy that has a substantial effect on U.S. commerce is within the scope of the Sherman Act, unless it occurs outside the United States.

Accepted Answer

A) True 
 B)False

Question 20

Dairy Cream Inc. makes and sells ice cream. Dairy Cream wants to merge with EZ Freeze Inc., its main competitor and a maker of ice cream and other frozen desserts. In a challenge to the deal on a charge of monopolization, the relevant product market includes ice cream and

Accepted Answer

A)  no other products. 
B)  products that are related, such as cake. 
C)  products that have identical attributes, such as frozen yogurt. 
D)  products that must be kept cold, such as frozen fruit.

Exam 38: Antitrust Law and Promoting Competition

The rule of reason represents a more flexible economic analysis of agreements among competitors than the rigid application of a per se standard.

A price-fixing agreement or other anticompetitive agreement to control a portion of U.S. markets cannot be held to be a per se violation of the antitrust laws if the agreement involves a foreign firm.

Cosmétique Inc. makes and sells cosmetics and related products. By selling its goods at prices substantially below the normal cost of production, the firm hopes to drive its competitors from the market. This is

Because market power arises from access to consumer data, collecting such information is an antitrust violation.

Power Inc. and QualGas Corporation refine and sell natural gas. To limit the supply on the market and thereby raise prices, Power and QualGas agree to buy "excess" supplies from dealers and "dispose" of it. This is

Battery Corporation's production, distribution, and marketing methods are unique. Its capital value and size are greater than its competitors. A suit is filed against the firm, alleging the offense of monopolization. To determine whether Battery has monopoly power requires looking at

Competition is not necessarily diminished solely as a result of market concentration.

Only the Federal Trade Commission can enforce the Clayton Act.

Because a single seller is free to deal with whomever it wishes, the seller's unilateral refusal to deal cannot violate Section 2 of the Sherman Act.

Expressly exempt from antitrust laws because it is not interstate commerce, according to the United Supreme Court, is

Under what circumstances would Quality Market, a small store in Rustic, an isolated town, be considered a monopoly? If Quality Market is a monopoly, is it in violation of antitrust law?

Two Chinese firms, Wong Ltd. and Xiang Ltd., engage in a conspiracy to control the distribution of certain goods in global markets. This may violate U.S. antitrust laws

Bio Med Corporation makes and sells Curative, the most prescribed name-brand pain-relief medication. Drugs Inc. has the potential to make a generic version of the same drug. Bio Med agrees to pay Drugs not to make or sell the generic. This agreement is most likely

Four grocery stores account for 80 percent of the retail food sales in Metro City. Two of the stores want to merge. In determining whether the merger violates the Clayton Act, the most crucial factor is

Ranch Supplies Company believes that its chief competitor Stock & Equipment Inc. engages in anticompetitive behavior in an attempt to drive Ranch Supplies out of the market. Under the Clayton Act, Ranch Supplies can sue Stock & Equipment for a violation of

To reduce marketing costs and raise prices, competitors can divide up marketing territories or customers without violating antitrust law.

Dig Inc. is the major wholesale distributor of heavy equipment in six states. Dig's closest competitor is Excavator Company. The two firms agree that Dig will operate in four of the states and Excavator in the other two. This is

Any conspiracy that has a substantial effect on U.S. commerce is within the scope of the Sherman Act, unless it occurs outside the United States.

Dairy Cream Inc. makes and sells ice cream. Dairy Cream wants to merge with EZ Freeze Inc., its main competitor and a maker of ice cream and other frozen desserts. In a challenge to the deal on a charge of monopolization, the relevant product market includes ice cream and