Question 1

Gearbox, Inc., a manufacturer of vehicle parts, refuses to sell to Motor Repair & Replace, Inc., a national vehicle service firm. Gearbox convinces Cam & Cylinder Company, a competitor, to do the same. This is

Accepted Answer

This is a group boycott, which is an agreement between competitors to refuse to do business with a third party.

Question 2

Earthgrown Flora, Inc., is one of many producers of cut flowers. Earthgrown refuses to sell its products to Florist Shops Corporation. Under antitrust law, this refusal is normally

Accepted Answer

Under antitrust law, a business generally has the right to choose with whom it will do business. A refusal to deal is not a violation unless it has an anti-competitive effect or is part of a broader scheme to restrain trade.

Question 3

An agreement that is deemed a per se violation will be examined by a court to determine whether the agreement actually constitutes a reasonable restraint of trade.

Accepted Answer

A per se violation is a violation of antitrust law that is considered inherently illegal without the need for further economic analysis or justification. This means that if an agreement is deemed a per se violation, it is automatically considered to be unreasonable restraint of trade and illegal without any further examination needed.

Question 4

By contract, Oil Shale Corporation forbids Petro Refining, Inc., a wholesale buyer of Oil Shale's products, from purchasing the products of its competitors. This exclusive-dealing contract is not permitted

Accepted Answer

Exclusive-dealing contracts are prohibited if their effect is to substantially lessen competition. In this case, Oil Shale Corporation is trying to eliminate competition by prohibiting Petro Refining, Inc. from purchasing from competitors. This contract would likely lead to a reduction in the number of potential buyers for the products of Oil Shale's competitors, thereby lessening competition.

Question 5

Any conspiracy-even if it occurs outside the United States-that has a substantial effect on U.S. commerce is within the reach of the Sherman Act.

Accepted Answer

The Sherman Act applies to any conspiracy that affects U.S. commerce, regardless of whether it occurs within or outside the United States.

Question 6

Frozen Confections Corporation makes and sells ice cream under a variety of brand names. Frozen wants to merge with Grocers Products Company, its main competitor. In considering a challenge to the deal, a court looks at the relevant product market. This most likely includes ice cream and

Accepted Answer

The relevant product market would likely include products that are reasonably interchangeable with ice cream, such as frozen yogurt, gelato, and other frozen desserts. This is because consumers may be willing to substitute one type of frozen dessert for another, making them part of the same market.

Question 7

The Sherman Act is an example of legislation designed to curb anticompetitive business practices.

Accepted Answer

The Sherman Antitrust Act was passed in 1890 with the aim of preventing businesses from engaging in anticompetitive practices such as monopolies, cartels, and mergers that could harm consumers and prevent new businesses from entering the market.

Question 8

North Mining Company and South Excavation Company agree to abide by the decisions of East Coast Financial Corporation as to their respective levels of production, markets, and prices, effectively reducing competition and increasing profits. This is most likely

Accepted Answer

The agreement between the two mining companies to abide by the decisions of a financial corporation regarding production, markets, and prices is a violation of antitrust laws and is considered an illegal restraint on trade. This type of agreement reduces competition, harms consumers, and typically results in increased profits for the collaborating companies at the expense of others.

Question 9

Monopoly power may be proved by evidence that a firm used its power to control prices and restrict output.

Accepted Answer

Monopoly power is characterized by the ability of a firm to control prices and restrict output, which can be used as evidence to prove its existence.

Question 10

A contract under which a seller forbids a buyer to purchase products from the seller's competitors is a tying arrangement.

Accepted Answer

The answer of A contract under which a seller forbids...

Question 11

​Labor unions can organize and bargain without violating antitrust law.

Accepted Answer

The National Labor Relations Act exempts labor unions from antitrust law when they are bargaining collectively on behalf of workers. Therefore, they can organize and negotiate without violating antitrust law.

Question 12

Any agreement among competitors to fix prices is subject to evaluation under the rule of reason.

Accepted Answer

The answer of Any agreement among competitors to fix prices...

Question 13

Sunrich Company can process solar energy into an inexpensive fuel for internal combustion engines. As an innovator in its market, Sunrich currently has the power to affect the price of its product. This is

Accepted Answer

Sunrich has market power because it has the ability to affect the price of its product due to its innovation and unique position in the market. Predatory pricing involves intentionally pricing below cost to drive competitors out of business, which is not mentioned in the scenario. Price discrimination involves charging different prices to different customers based on their willingness to pay, which is also not mentioned in the scenario. Monopsony power involves a single buyer having significant influence over price in a market, which is not applicable in this case as Sunrich is a seller.

Question 14

A trade association practice or agreement that restrains trade is generally analyzed under the rule of reason.

Accepted Answer

The rule of reason is a legal doctrine used to determine if a trade practice or agreement unreasonably restrains competition, considering factors like purpose, effects, and market context.

Question 15

In determining the legality of a merger, market concentration has no significance.

Accepted Answer

Market concentration is a crucial factor in determining the legality of a merger. If the merger would result in a high concentration of market share in a particular industry, it could raise concerns about potential anti-competitive behavior and harm to consumers. Therefore, regulators may require additional scrutiny or even block the merger altogether if it is found to substantially lessen competition in the market.

Question 16

For products that are sold nationwide, the relevant geographic market is the entire globe.

Accepted Answer

The relevant geographic market for a product sold nationwide is typically the country or region in which it is sold, not the entire globe.

Question 17

Territorial and customer restrictions imposed via vertical restraint are judged under the rule of reason.

Accepted Answer

Vertical restraints, such as territorial and customer restrictions, are typically evaluated under the "rule of reason" in antitrust law, which considers the overall impact on competition rather than deeming them illegal per se.

Question 18

Market power is the ability of a firm to enter a given market.

Accepted Answer

Market power is not the ability to enter a market, but rather the ability of a firm to influence the price or output in a given market, often through their dominance or control over key resources, technology, or consumer preference.

Question 19

Any action challenged as an attempt to monopolize must have been specifically intended to exclude competitors and garner monopoly power.

Accepted Answer

The answer of Any action challenged as an attempt to...

Question 20

The basis of antitrust legislation is our society's desire to foster competition.

Accepted Answer

The answer of The basis of antitrust legislation is our...

Quiz 22: Antitrust Law and Promoting Competition