Question 1

Price fixing is the practice of one firm setting the price of a final product at a specific level.

Accepted Answer

Price fixing involves an agreement between competitors to set prices at a certain level, rather than a single firm setting the price of its product.

Question 2

Exclusive dealing occurs when a firm agrees that goods sold or leased will be used only with other goods of the seller or lessor.

Accepted Answer

Exclusive dealing refers to a situation where a seller requires a buyer to purchase exclusively from the seller and not from its competitors, rather than requiring the goods to be used only with the seller's other products.

Question 3

Tort law pertains to:

Accepted Answer

Tort law deals with civil wrongs or injuries caused to individuals due to the negligence or intentional actions of others, which create a legal obligation to compensate the injured parties. These injuries may be physical, emotional, or financial. Therefore, option A is the correct choice as it closely relates to the definition of tort law.

Question 4

A tying agreement occurs when a firm agrees that goods sold or leased will be used only with other goods of the seller or lessor.

Accepted Answer

A tying agreement is a practice where a seller offers a product or service to a buyer on the condition that the buyer agrees to purchase a separate product or service from the seller. It is considered anti-competitive behavior and is illegal in many countries.

Question 5

A natural monopoly is present where economies of scale are sufficiently large that, if two or more firms were to be involved in the production of the industry output, unit costs would be higher than for a monopoly.

Accepted Answer

A natural monopoly occurs when a single firm can produce the entire market output at a lower cost compared to multiple firms. This is due to the presence of economies of scale, which means that as the scale of production increases, the average cost per unit of output decreases. If multiple firms were to enter the market, they would have to split the market demand, and each would produce at a smaller scale, resulting in higher unit costs for each firm. Therefore, with natural monopolies, it is cheaper for a single firm to produce the entire industry output rather than having multiple firms.

Question 6

Tort law deals with injuries sustained by private parties as a result of non-performance of a duty created by law.

Accepted Answer

Tort law is a branch of civil law that deals with personal injuries and other wrongful acts. It is based on the idea that individuals should be held responsible for their actions, and that they should compensate others for any harm or injury caused by those actions. The duty created by law can be either by statute or by common law.

Question 7

Torts are laws that deal with wrongful acts that are viewed as offenses against the state or government.

Accepted Answer

Torts are laws that deal with wrongful acts that are viewed as offenses against an individual or their property, rather than offenses against the state or government.

Question 8

A tying agreement occurs when a group of firms agrees to set the price of a final or intermediate product at a specific level.

Accepted Answer

A tying agreement occurs when a firm bundles two or more products together and sells them as a single package, often with the condition that the customer must buy all of the products in the package. It is illegal under antitrust laws in many countries.

Question 9

A consent decree is a statement of certain provisions agreed to by both an administrative agency of the United States federal government and the alleged wrongdoer named in a complaint filed with that agency.

Accepted Answer

A consent decree is a legally binding agreement between an administrative agency and an alleged wrongdoer that typically includes certain provisions and penalties. Both parties must agree to the terms of the consent decree.

Question 10

Criminal law deals with injuries sustained by private parties as a result of non-performance of a duty created by law.

Accepted Answer

Criminal law deals with offenses against society as a whole, not just injuries sustained by private parties.

Question 11

Criminal law pertains to acts that are viewed as offenses against a federal, state or local government.

Accepted Answer

Criminal law is concerned with actions that are considered to be crimes against the government, as opposed to civil law, which deals with disputes between private parties.

Question 12

A contract is a binding agreement between two parties wherein one of the parties is obliged to perform a specific act and the obligation to perform that act is recognized or enforced by law.

Accepted Answer

The answer of A contract is a binding agreement between...

Question 13

Price fixing is the practice of a group of firms agreeing to set the price of a final or intermediate product at a specific level.

Accepted Answer

Price fixing is the illegal practice of collusion among market participants to set fixed prices for goods or services in order to eliminate competition.

Question 14

Contract law pertains to the establishment of contractual obligations and to wrongful acts in breach of contracts.

Accepted Answer

Contract law does indeed pertain to the establishment of contractual obligations and to wrongful acts in breach of contracts.

Question 15

In the case of public utility rate setting, one of the jobs of the regulators is to insure that privately owned utility firms earn a fair of return on its investment.

Accepted Answer

This is true. Regulators aim to strike a balance between protecting consumers from excessive rates and ensuring that utility companies are able to make a reasonable profit.

Question 16

Antitrust laws are laws regulating any business practices or agreements that intensify monopoly power or otherwise restrict trade.

Accepted Answer

Antitrust laws, also known as competition laws, aim to promote fair competition in the market and prevent monopolistic behavior that could harm consumers or other businesses. These laws prohibit practices such as price-fixing, market allocation, and tying arrangements that could limit competition and restrict trade.

Question 17

A contract is a binding agreement between two or more parties wherein one of the parties is obliged to do or refrain from doing a specific act and the obligation incurred is recognized or enforced by law.

Accepted Answer

This is the definition of a contract under the law.

Question 18

Criminal law pertains to:

Accepted Answer

Criminal law pertains to acts that are viewed as offenses against a federal, state or local government. It involves the prosecution of an individual by the government for an action that has been classified as a crime. It is different from civil law, which deals with disputes between private individuals or organizations.

Question 19

Exclusive dealing refers to a situation where a firm buying or leasing the goods of one firm agrees not to deal with competing suppliers.

Accepted Answer

Exclusive dealing involves an agreement to only do business with one supplier and not with any competing suppliers.

Question 20

Contract law deals with injuries sustained by private parties as a result of non-performance of a duty created by law.

Accepted Answer

Contract law deals with the rights and obligations that arise from agreements between parties, not with injuries sustained due to non-performance of a duty created by law, which is more related to tort law.

Quiz 16: Legal and Regulatory Environment of the Firm