Question 1

Arnold believes that U.S. firms should be allowed to enter into joint ventures with foreign multinationals without government interference. Betty thinks that the Federal Trade Commission should monitor such joint ventures closely. Based on this scenario, which of the following statements is true?

Accepted Answer

Arnold's belief that U.S. firms should be allowed to enter into joint ventures with foreign multinationals without government interference aligns with the Chicago School approach to antitrust policy, which advocates for minimal government intervention in market activities. Betty's view that the Federal Trade Commission should monitor such joint ventures closely suggests a more interventionist approach, which is not in line with the Chicago School approach.

Question 2

Cal believes criminal penalties for antitrust violations should be increased. Donna believes antitrust offenses should be decriminalized. Based on the scenario, which of the following statements can be inferred?

Accepted Answer

D

Question 3

The Harvard School is a(n) approach to antitrust policy.

Accepted Answer

The Harvard School is known for a structural approach to antitrust policy, which emphasizes the importance of market structure in evaluating the competitiveness of a market.

Question 4

The School approach to antitrust policy argues that antitrust decisions should be based solely on the criterion of economic .

Accepted Answer

The School approach to antitrust policy is also known as the Chicago School and it emphasizes the importance of economic efficiency as the main criterion in antitrust decisions. This approach views market competition as the most effective means of promoting consumer welfare and believes that government intervention should be limited to addressing specific instances of market failure, such as monopolies or collusion. Therefore, the choice that reflects this approach is D - Chicago; efficiency.

Question 5

The Harvard School of antitrust policy favors the consolidation of wealth and power into a few firms capable of competing with the largest foreign corporations.

Accepted Answer

The Harvard School of antitrust policy actually advocates for competition and preventing the consolidation of wealth and power into a few firms. They believe that this promotes innovation and helps to prevent market domination by a few large corporations.

Question 6

Which of the following antitrust provisions focuses on the unlawful selling of corporate assets to create a monopoly?

Accepted Answer

Section 7 of the Clayton Act prohibits mergers and acquisitions that may substantially lessen competition or create a monopoly. This includes the unlawful selling of corporate assets that could result in a monopoly.

Question 7

Oil Company used the trust arrangement to monopolize the oil industry in the late 1800s.

Accepted Answer

The trust arrangement was famously used by John D. Rockefeller's Standard Oil Company to consolidate and monopolize the oil industry in the late 1800s.

Question 8

Advocates of the promotion of the maximization of consumer welfare using market principles and efficiency criteria define consumer welfare as an improvement in the allocation of resources without an impairment to productive efficiency.

Accepted Answer

This definition promotes the idea that market mechanisms and efficient allocation of resources can lead to an increase in consumer welfare without reducing productive efficiency.

Question 9

The Chicago School is a market or efficiency approach to antitrust policy.

Accepted Answer

The Chicago School of economics believes in promoting efficiency and consumer welfare through market mechanisms, and this approach has been applied to antitrust policy. Thus, the statement is true.

Question 10

Section 1 of the Sherman Act of 1890 forbids monopolizing, attempts to monopolize, or conspiracies to monopolize.

Accepted Answer

Section 1 of the Sherman Act addresses anti-competitive agreements, while Section 2 deals with monopolization and attempts to monopolize.

Question 11

The Chicago School approach to antitrust policy is a or approach to antitrust policy.

Accepted Answer

The Chicago School approach emphasizes the importance of promoting efficiency in markets through antitrust policy. This approach believes that the market, rather than government intervention or regulation, is the best mechanism for ensuring that resources are allocated efficiently. Therefore, the primary goal of antitrust policy should be to promote competition and efficiency, rather than to ensure fairness or equity.

Question 12

Trusts were originally business arrangements in which owners of stocks in several companies placed their securities in the hands of , who controlled and managed the companies.

Accepted Answer

The sentence describes trusts as business arrangements in which owners of stocks in several companies placed their securities in the hands of trustees, who controlled and managed the companies. Therefore, the correct choice is B) trustees.

Question 13

Advocates of the antitrust goal that preserves small businesses and an economy characterized by many sellers competing with one another would .

Accepted Answer

The answer of Advocates of the antitrust goal that preserves...

Question 14

Advocates of the argue that when large companies are allowed to merge, fix prices, and participate in joint ventures, jobs are lost and plants are shut down in some areas.

Accepted Answer

Advocates argue that mergers and joint ventures can lead to job losses and plant closures, which aligns with the preservation of local control of business and protection against labor dislocation.

Question 15

Which of the following antitrust provisions focuses on monopolization and conspiracies to monopolize?

Accepted Answer

Sherman Act, Section 2 focuses on monopolization and conspiracies to monopolize.

Question 16

Because the Act (enacted in 1890) was aimed at monopolies that called themselves trusts, it was called a(n) statute.

Accepted Answer

The Act that was enacted in 1890 and aimed at monopolies that called themselves trusts was the Sherman Antitrust Act, making choice C the correct answer. The Clayton Antitrust Act was enacted in 1914 and expanded upon the Sherman Act. Fiduciary refers to a legal or ethical relationship of trust between two parties, and while it may be relevant in some contexts, it is not applicable or mentioned in the question.

Question 17

A trust is defined as a .

Accepted Answer

A trust is a business arrangement where owners of stocks in several companies place their securities with trustees, who manage the companies and distribute earnings to the owners.

Question 18

The formulation and enforcement of antitrust policy have been substantially affected by the disciplines of and .

Accepted Answer

The formulation and enforcement of antitrust policy, which involves regulating competition in the market, has been greatly influenced by both legal principles and economic analysis. Legal principles help define the boundaries of antitrust law and provide a basis for enforcement, while economic analysis helps to understand how firms compete, how markets work, and the benefits and costs of different antitrust policies. Therefore, the disciplines of law and economics are essential in shaping and enforcing antitrust policy.

Question 19

George believes that antitrust policy should lead to more efficient markets. Based on George's view, which of the following statements is true?

Accepted Answer

The answer of George believes that antitrust policy should lead...

Question 20

The Chicago School approach to antitrust policy argues that antitrust decisions should be based solely on the criterion of of welfare.

Accepted Answer

The Chicago School approach advocates for the application of antitrust law to promote consumer welfare maximization. The approach believes that antitrust laws should be structured to encourage innovation, reduce costs, and regulate anti-competitive practices in the market. This would ultimately benefit consumers by enhancing competition, lowering prices, and increasing the quality of goods and services.

Quiz 24: Antitrust Laws