Question 1

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

Accepted Answer

The answer of Under what circumstances would Small's Market, a...

Question 2

Gaucho Ranchland Supplies Corporation believes that Vaquero Stock & Equipment Corporation engages in anticompetitive behavior in an attempt to drive Gaucho, its chief competitor, out of the market. Antitrust laws can be enforced against Vaquero by

Accepted Answer

Under antitrust laws, Gaucho, as a competitor, has standing to sue Vaquero for engaging in anticompetitive behavior. Gaucho can bring a lawsuit against Vaquero for conducting illegal activities that may cause harm to Gaucho's business.

Question 3

Soft Drink Corporation is charged with violating the Sherman Act through conduct subject to the rule of reason. When applying the rule of reason in this situation, a court will not consider

Accepted Answer

The rule of reason analysis specifically looks at the potential effect of the agreement on competition in the relevant market, and takes into consideration any pro-competitive justifications for the conduct. The impact on international trade is not a relevant factor in this analysis.

Question 4

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

Accepted Answer

Predatory pricing is a strategy where a company sells its products at prices that are lower than the actual cost of production with the intention of driving its competitors out of the market. Spa Selectiva is using this strategy to eliminate competition, making the answer B.

Question 5

Clear View Corporation offers to sell its flat-panel display monitors to Best Computer & Video, Inc., only if Best agrees to buy Clear View's servicing of its products along with the monitors. This is

Accepted Answer

This is a tying arrangement since Clear View is linking the sale of its monitors to the sale of its servicing, which is a separate product.

Question 6

Grip-All Tires, Inc., conditions the sale of one of its products on Harvey's Service Stores agreeing to buy another of Grip-All's products. This deal is legal

Accepted Answer

This deal may potentially have an effect on competition, which would need to be evaluated to determine if it is legal or not.

Question 7

A suit is filed against AgriSeeds Corporation, alleging that the firm committed the offense of monopolization. To determine whether AgriSeeds has monopoly power requires looking at

Accepted Answer

To determine whether AgriSeeds has monopoly power, it is necessary to define the relevant market in which it operates, including the substitute products available, and then assess AgriSeeds's market share within that market. The company's size alone, as indicated in choice A, does not determine whether it has monopoly power. Choices B and C are also irrelevant to this analysis.

Question 8

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 are, would the result be the same? Why or why not?

Accepted Answer

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

Question 9

To acquire monopoly power in its market, Global Condiments, Inc., sets its prices substantially below the normal costs of production. Under antitrust law, this is

Accepted Answer

The answer of To acquire monopoly power in its market,...

Question 10

Pads & Pods Corporation requires all distributors of its products to sell the products at specified minimum prices. This resale price maintenance agreement is

Accepted Answer

Resale price maintenance agreements are generally evaluated under the rule of reason, which balances the anti-competitive effects of the agreement against its pro-competitive benefits. The agreement may still be deemed illegal if it has anti-competitive effects that outweigh its benefits, but it is not automatically illegal (per se) or legal.

Question 11

Speedee Snoboards, Inc., refuses to sell its products to Timber Mountain WinterSports Stores, Inc., a retail snowboard dealership. This is

Accepted Answer

Speedee Snoboards, Inc., is engaging in a unilateral refusal to deal by refusing to sell its products to Timber Mountain WinterSports Stores, Inc. This is not an exclusive-dealing contract, a territorial restriction, or an attempted monopolization.

Quiz 22: Antitrust Law and Promoting Competition