Question 1

In the 1982 AT&T antitrust case, the resolution was an out-of-court settlement involving a

Accepted Answer

The 1982 AT&T antitrust case resulted in the breakup of AT&T into several smaller firms, known as the Baby Bells. The out-of-court settlement was a consent decree that required AT&T to divest its local telephone companies and separate them from its long-distance services. This was done to promote competition in the telecommunications industry and prevent AT&T from having a monopoly over the industry.

Question 2

In the 2000 decision on the Microsoft antitrust case, the eventual remedy involved a

Accepted Answer

The remedy in the Microsoft antitrust case involved changes in Microsoft's business practices, such as sharing its application programming interfaces with third-party companies, rather than breaking up the company or merging it with another.

Question 3

The decision on the DuPont cellophane case of 1956 dealt with the issue of

Accepted Answer

The decision on the DuPont cellophane case of 1956 dealt with determining the relevant market for a particular product. The case was about whether DuPont's patent on cellophane violated antitrust laws by creating a monopoly in the packaging industry. The court had to determine what the relevant market was for the purposes of the Sherman Act, which prohibits monopolization or attempts to monopolize any part of interstate commerce.

Question 4

Which of the following statements is true?

Accepted Answer

According to the text, "Behavioralists" believe that some monopolists are "good" monopolists. None of the other statements mentioned in the options are true. Option A is incorrect because "Behavioralists" do not generalize all monopolists as "bad". Option B is incorrect because "Structuralists" do not strongly abide by the "rule of reason" but they rely on the "per se" rule in some cases. Option D is incorrect because "Structuralists" do not consider any monopolist as "good".

Question 5

Which of the following cases established that the mere possession of monopoly power violated antitrust laws?

Accepted Answer

The Alcoa case of 1945 established that the mere possession of monopoly power violated antitrust laws. This case set a precedent for future antitrust cases, including the IBM case of 1982 and the Microsoft case of 1998, which also dealt with allegations of monopolistic practices. The AT&T case of 1982 was focused on the breakup of the telecommunications giant for violations of antitrust laws, but did not establish the principle that mere possession of monopoly power was illegal.

Question 6

A merger between one firm and another firm that is its supplier is known as a

Accepted Answer

A merger between one firm and its supplier is known as a vertical merger. Vertical mergers involve the combination of firms operating at different levels of the production or distribution process for the same good or service. By merging with a supplier, the acquiring firm aims to reduce costs, increase efficiency, and gain greater control over the supply chain.

Question 7

The view that the mere possession of monopoly power is a violation of the antitrust laws, as in the Alcoa case of 1945, suggests that the application of antitrust laws should be based on industry

Accepted Answer

The view that the mere possession of monopoly power is a violation of the antitrust laws is based on the structure of the industry rather than its behavior, size, or efficiency. This view assumes that monopolies are inherently harmful to competition and consumers, regardless of the actual conduct of the monopolist. Therefore, antitrust laws should be applied based on the structure of the industry, such as the concentration of market power and barriers to entry, rather than the behavior or efficiency of individual firms.

Question 8

Conglomerate mergers are combinations of

Accepted Answer

Conglomerate mergers refer to the combination of two or more firms that produce unrelated products or services. This type of merger allows the newly merged company to diversify its operations and reduce risk, as it is not solely dependent on one product or service.

Question 9

Which of the following U.S. Supreme Court cases ruled that only monopolies that "unreasonably restrain trade" are violating antitrust laws?

Accepted Answer

The U.S. Steel case of 1920 established the "rule of reason," which determined that only monopolies that unreasonably restrain trade are in violation of antitrust laws.

Question 10

If Tyson Corporation, a firm that raises and processes chickens, combined with Kentucky Fried Chicken, the resulting merger would be an example of a

Accepted Answer

A vertical merger occurs when companies in different stages of the same industry join together. In this case, Tyson Corporation and Kentucky Fried Chicken are in different stages of the chicken industry, with Tyson Corporation raising and processing chickens and Kentucky Fried Chicken using those chickens to prepare their food products. Therefore, this merger would be considered a vertical merger.

Question 11

The idea that competition is in some circumstances insufficient to achieve allocative efficiency and ensure fairness to consumers and competing firms is most closely associated with which antitrust perspective?

Accepted Answer

The idea that competition alone may not be sufficient to ensure fairness and efficiency is associated with the active antitrust perspective, which calls for government intervention to promote competition and protect consumers and smaller firms. The other options do not directly address this concern.

Question 12

An example of a horizontal merger is one between an airline and

Accepted Answer

A horizontal merger involves two companies that operate in the same industry or market. Therefore, the most logical choice would be another airline. Choosing options A, C, or D would be examples of a vertical merger.

Question 13

The merger of a firm in one industry with another firm in the same industry that sells similar products is called a

Accepted Answer

A horizontal merger is when two firms in the same industry that sell similar products merge together. This type of merger can lead to increased market power and potentially higher prices for consumers.

Question 14

Which of the following beliefs is not strongly espoused by the "laissez-faire perspective" in antitrust policy?

Accepted Answer

The answer of Which of the following beliefs is not...

Question 15

One main difference in the rulings on the 1945 Alcoa case and the 1956 DuPont cellophane case is that the Alcoa case

Accepted Answer

The main difference between the two cases was how they defined the market. The Alcoa case defined the market broadly, whereas the DuPont cellophane case defined the market narrowly.

Question 16

Which of the following beliefs is not strongly espoused by the "active antitrust perspective" in policy enforcement?

Accepted Answer

The "active antitrust perspective" typically focuses on preventing illegal tactics and ensuring fair competition, rather than accepting monopolies as a natural outcome of competition and creative destruction.

Question 17

Intel's monopoly in the sale of microchips for personal computers would be considered

Accepted Answer

Behavioralists focus on the conduct of the firm, while structuralists focus on market structure. Intel's dominance might be seen as legal by behavioralists if they don't engage in anti-competitive behavior, but illegal by structuralists due to market dominance.

Question 18

A merger between McDonald's and Burger King would be an example of a

Accepted Answer

A horizontal merger is a merger between two companies that operate in the same industry or market, and in this case, McDonald's and Burger King are both fast food restaurants that target similar customers. Therefore, a merger between them would be an example of a horizontal merger.

Question 19

Which of the following statements is true?

Accepted Answer

The active antitrust perspective believes in government intervention to enforce the rules of the competitive game, while the laissez-faire perspective favors minimal government intervention and trusts in competitive market forces to regulate firms' behavior. Option A is incorrect because the active antitrust perspective does not believe that competition will automatically reduce a firm's monopoly power in the long run. Option C is incorrect because it depicts firms as rule violators rather than rational actors pursuing their self-interests. Option D is incorrect because the laissez-faire perspective opposes an active enforcement of antitrust policy.

Question 20

The so-called rule of reason in interpreting antitrust legislation suggests that the application of antitrust laws should be based on industry

Accepted Answer

The rule of reason in antitrust law focuses on the behavior of companies, assessing whether their conduct unreasonably restrains trade or competition, rather than solely on market structure or concentration ratios.

Quiz 21: Antitrust Policy and Regulation

In the 1982 AT&T antitrust case, the resolution was an out-of-court settlement involving a

In the 2000 decision on the Microsoft antitrust case, the eventual remedy involved a

The decision on the DuPont cellophane case of 1956 dealt with the issue of

Which of the following statements is true?

Which of the following cases established that the mere possession of monopoly power violated antitrust laws?

A merger between one firm and another firm that is its supplier is known as a

The view that the mere possession of monopoly power is a violation of the antitrust laws, as in the Alcoa case of 1945, suggests that the application of antitrust laws should be based on industry

Conglomerate mergers are combinations of

Which of the following U.S. Supreme Court cases ruled that only monopolies that "unreasonably restrain trade" are violating antitrust laws?

If Tyson Corporation, a firm that raises and processes chickens, combined with Kentucky Fried Chicken, the resulting merger would be an example of a

The idea that competition is in some circumstances insufficient to achieve allocative efficiency and ensure fairness to consumers and competing firms is most closely associated with which antitrust perspective?

An example of a horizontal merger is one between an airline and

The merger of a firm in one industry with another firm in the same industry that sells similar products is called a

Which of the following beliefs is not strongly espoused by the "laissez-faire perspective" in antitrust policy?

One main difference in the rulings on the 1945 Alcoa case and the 1956 DuPont cellophane case is that the Alcoa case

Which of the following beliefs is not strongly espoused by the "active antitrust perspective" in policy enforcement?

Intel's monopoly in the sale of microchips for personal computers would be considered

A merger between McDonald's and Burger King would be an example of a

Which of the following statements is true?

The so-called rule of reason in interpreting antitrust legislation suggests that the application of antitrust laws should be based on industry