Deck 27: Antitrust and Monopoly

Question 1

A joint effort by businesspersons to obtain legislative action is not exempt from the antitrust laws.

Answer 1

False

Question 2

No person may be a director for two or more competing corporations at the same time.

Answer 2

False

Question 3

Only serious threats of monopolization are condemned as violations of antitrust law.

Answer 3

True

Question 4

Market power is the economic power to buy what you want in a given market.

Question 5

Monopoly power is an extreme amount of market power.

Question 6

Price discrimination is not always a violation of antitrust law.

Question 7

U.S.antitrust law may protect foreign consumers and competitors from violations by U.S.firms.

Question 8

Attempted monopolization is not a violation of antitrust law.

Question 9

Professional sports are exempt from antitrust regulation.

Question 10

Antitrust law prohibits anticompetitive practices.

Question 11

Only the Federal Trade Commission can prosecute violations of all of the antitrust laws.

Question 12

An act must have a substantial impact on interstate commerce to violate antitrust law.

Question 13

A tying arrangement exists when two competitors agree to tie,or fix,their prices at the same level.

Question 14

A firm cannot be a monopolist unless it is the sole seller in a market.

Question 15

One component of the relevant market is the geographic boundaries of the market in which the firm and its competitors sell the product or service.

Question 16

The possession of monopoly power is only one element of the offense of monopolization.

Question 17

Restraints that have a significant impact on interstate commerce do not violate antitrust law.

Question 18

Using market power to drive competitors out of business is illegal.

Question 19

Predatory pricing is above-cost pricing.

Question 20

Most other nations' antitrust laws do not apply extraterritorially.

Question 21

Seven Ivy League colleges and universities conspire to fix tuition prices and financial aid packages.Under the Sherman Act,this is

A)a per se violation.
B)a violation only if their competitors also lower prices.
C)a violation only if they thereby acquire monopoly power.
D)not a violation.

Question 22

Energy Services Corporation engages in trade practices that may violate antitrust law.The Federal Trade Commission has the power to act against anticompetitive behavior under

A)the Clayton Act.
B)the Federal Trade Commission Act.
C)the Interstate Commerce Act.
D)the Sherman Act.

Question 23

Spa Serena LLC makes and sells beauty salon supplies.By selling its product at prices substantially below the normal cost of production,Spa Serena hopes to drive its competitors from the market.This is

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

Question 24

Enterprising Business Corporation may be engaging in conduct that violates the Sherman Act.To bring an action against the firm requires that its conduct have a significant impact on

A)international commerce.
B)Internet commerce.
C)interstate commerce.
D)intrastate commerce.

Question 25

CompTech Company sells its computer-chip division to Delta Chips Corporation and promises not to reenter the chip market for three years.At common law,this is

A)a restraint of trade and reasonable.
B)a restraint of trade and unreasonable.
C)not a restraint of trade and reasonable.
D)not a restraint of trade and unreasonable.

Question 26

Natural Spices,Inc. ,and Oriental Import Company,two condiment companies,form a joint venture to fund research into producing spices more cost effectively.This is

A)a violation of the Clayton Act.
B)a violation of the Federal Trade Commission Act.
C)a violation of the Sherman Act.
D)exempt from antitrust enforcement.

Question 27

A suit is filed against Fashionista Goods,Inc.(FGI),alleging that FGI committed the offense of monopolization.FGI's intent

A)is irrelevant.
B)may be inferred from proof of monopoly power and anticompetitive conduct.
C)must be proved beyond a reasonable doubt.
D)must be proved by clear and convincing evidence.

Question 28

Machine Parts Corporation (MPC),a manufacturer of machine parts,wants to maximize its profits.The drawback to a decision to raise prices significantly is that MPC

A)may lose its reputation as a price discounter.
B)may lose sales to its competitors.
C)will complicate its bookkeeping procedures.
D)will have to pay additional income taxes.

Question 29

Eagle Corporation and First Manufacturing Company are competitors.An interlocking directorate would occur if

A)Eagle acquires a controlling interest in First to reduce competition.
B)individuals serve on the boards of Eagle and First simultaneously.
C)the boards of Eagle and First deadlock over the same issue.
D)the directors of Eagle and First intermarry to facilitate price fixing.

Question 30

Press Now Corporation,a disk manufacturer,sells its product in certain quantities to Quik 2U,a retailer,for $275 but charges Rite Here,a competitive retailer,$350.Under the Clayton Act,this is legal

A)under any circumstances.
B)unless its effect is to cause a competitor a loss of any business.
C)unless its effect is to substantially lessen competition.
D)unless there is no effect on a competitor.

Question 31

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.

Question 32

Coast-to-Coast Sales Company charges different buyers different prices for identical goods.This is

A)price discrimination.
B)a market division.
C)a price-fixing agreement.
D)a tying arrangement.

Question 33

Master Fabrication 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.

Question 34

To prevent its competitors from obtaining sufficient supplies to make their products,Molded Plastics,Inc. ,uses its market power to increase the prices of those supplies.This is

A)a refusal to deal.
B)business acumen.
C)predatory bidding.
D)predatory pricing.

Question 35

Pipeline Digital,Inc. ,sells equipment to link businesses via the Internet.Pipeline will be considered to have monopoly power if its share of the relevant market is equal to or exceeds

A)50 percent.
B)60 percent.
C)70 percent.
D)80 percent.

Question 36

Dairy Products,Inc. ,a wholesaler of milk and other dairy goods,decides not to enter the market for soy products.Such business decisions are usually based on

A)a greater return that can be realized in other accessible markets.
B)the corporate image that a product will project.
C)the difficulty of marketing a product.
D)the directors' personal preferences.

Question 37

Fresh Veggies,Inc. ,a wholesaler,refuses to sell its produce to Grocery Mart Stores,Inc. ,a retailer.Under antitrust law,this is

A)"an unfair or deceptive act or practice."
B)a per se violation.
C)not a violation.
D)subject to analysis under the rule of reason.

Question 38

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.

Question 39

Granite Golfballs,Inc. ,has the power to control the market for its product.Antitrust law regulates

A)how Granite acquired its power and what it does with it.
B)how Granite makes its product and who buys it.
C)the degree of trust Granite has with its customers and suppliers.
D)the size of Granite's market.

Question 40

Excel Corporation conditions shipments of its products to Federated Stores,Inc. ,on Federated's agreement not to buy products from Gnarly Goods Company,Excel's competitor.This is

A)an exclusive-dealing contract.
B)a tying arrangement.
C)price discrimination.
D)price fixing.

Question 41

3D,Inc. ,develops a series of video games that project images in three dimensions,allowing players to interact in real space with the elements of the game.The games are wildly successful.Other game makers find themselves nearly out of business until 3D is practically the only seller in the video game market.Does 3D have a monopoly ?Does 3D's situation violate the antitrust laws ?Explain.

Question 42

Under what circumstances would Mom's Tools & Hardware,a small store in the middle of Nowhere,a small,isolated town,be considered a monopoly? If Mom's is a monopoly,is it in violation of antitrust law?