Question 1

The U.S. Steel case of 1920 and the Alcoa case of 1945 dealt with which antitrust question?
A)To what extent should firms be limited in buying plant and equipment from other firms?
B)Should an industry be judged by its behavior or by its structure?
C)Should the steel and aluminum industries be considered natural monopolies?
D)Should mergers be permitted between firms in closely related industries?

Accepted Answer

These cases focused on whether antitrust laws should evaluate an industry based on the behavior of the firms within it or the overall structure of the industry. The U.S. Steel case questioned if the company's dominance was due to unfair practices or simply efficient business, while the Alcoa case dealt with whether Alcoa's control over aluminum production constituted a monopoly through anti-competitive actions or was a result of its efficiency and innovation.

Question 2

The so-called rule of reason, based on the 1920 U.S. Steel case, stipulates that a merger of two firms in an industry is
A)illegal if the firms are large.
B)illegal because it increases the monopoly power of the resulting firm.
C)legal if there is no resulting unreasonable restraint of trade.
D)legal because the firm will be subject to regulatory control.

Accepted Answer

The rule of reason, as established in the 1920 U.S. Steel case, holds that a merger is legal as long as it does not result in an unreasonable restraint of trade, focusing on the merger's actual effects rather than its mere size or the increase in market power.

Question 3

The decision on the DuPont cellophane case of 1956 dealt with the issue of
A)unfair advertising practices.
B)determining the relevant market for a particular product.
C)DuPont's ownership of General Motors stock.
D)price-fixing in the chemical industry.

Accepted Answer

The DuPont cellophane case primarily focused on defining the relevant market for antitrust analysis, which in this case was the market for flexible packaging materials, not just cellophane alone.

Question 4

In the 2000 decision on the Microsoft antitrust case, the eventual remedy involved a
A)change in the business practices of Microsoft.
B)merging of Microsoft with another company.
C)breakup of Microsoft into smaller firms.
D)takeover of Microsoft by the government.

Accepted Answer

The remedy in the Microsoft antitrust case primarily involved changes in the company's business practices to ensure compliance with antitrust laws, rather than a breakup, merger, or government takeover.

Question 5

Which of the following beliefs is not strongly espoused by the "active antitrust perspective" in policy enforcement?
A)Firms occasionally use illegal tactics to gain over competitors.
B)Antitrust authorities must act like officials in a football game.
C)Competition and creative destruction could lead to monopolies.
D)When competition is insufficient, allocative inefficiencies will occur.

Accepted Answer

The "active antitrust perspective" generally supports the idea that antitrust authorities should actively monitor and intervene in markets to prevent anti-competitive behavior and ensure fair competition. This perspective acknowledges that firms might use illegal tactics to outcompete others (A), sees antitrust authorities as referees ensuring fair play (B), and recognizes the risk of allocative inefficiencies in the absence of sufficient competition (D). However, it does not typically argue that competition and creative destruction could lead to monopolies (C); instead, it often views these forces as beneficial for preventing monopolies and encouraging innovation.

Question 6

In the 1982 AT&T antitrust case, the resolution was an out-of-court settlement involving a
A)change in the business practices of AT&T.
B)cease-and-desist order.
C)breakup of AT&T into several smaller firms.
D)takeover of AT&T by another company.

Accepted Answer

The resolution of the 1982 AT&T antitrust case involved the breakup of AT&T into several smaller firms, known as the Regional Bell Operating Companies or "Baby Bells," to introduce competition into the telephone industry.

Question 7

One main difference in the rulings on the 1945 Alcoa case and the 1956 DuPont cellophane case is that the Alcoa case
A)focused on structure, whereas the DuPont case focused on behavior.
B)focused on behavior, whereas the DuPont case focused on structure.
C)defined the market broadly, whereas the DuPont case defined the market narrowly.
D)defined the market narrowly, whereas the DuPont case defined the market broadly.

Accepted Answer

The answer of One main difference in the rulings on...

Question 8

Which of the following U.S. Supreme Court cases ruled that only monopolies that "unreasonably restrain trade" are violating antitrust laws?
A)DuPont cellophane case of 1956
B)U.S. Steel case of 1920
C)Alcoa case of 1945
D)AT&T case of 1982

Accepted Answer

The U.S. Steel case of 1920 established the principle that only monopolies that "unreasonably restrain trade" are in violation of antitrust laws. This decision clarified the application of the Sherman Antitrust Act by indicating that not all monopolies or large companies are inherently in violation of the law, but rather, their specific practices must be examined to determine if they harm competition.

Question 9

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
A)behavior.
B)size.
C)efficiency.
D)structure.

Accepted Answer

The Alcoa case of 1945 is notable for the court's view that the mere possession of monopoly power, even if not abused, could be a violation of antitrust laws. This perspective emphasizes the importance of the structure of the industry (i.e., how it is organized and the distribution of market power within it) rather than the behavior, size, or efficiency of the firms within it.

Question 10

Conglomerate mergers are combinations of
A)many small firms.
B)firms producing the same product.
C)firms producing unrelated products.
D)firms operating at different stages in a given production process.

Accepted Answer

Conglomerate mergers involve firms producing unrelated products, allowing them to diversify their business operations and reduce overall risk.

Question 11

In the 1911 Standard Oil case, the U.S. Supreme Court found Standard Oil
A)guilty of tax evasion for merger activity.
B)not guilty of tax evasion for merger activity.
C)guilty of monopolizing the petroleum industry.
D)not guilty of monopolizing the petroleum industry.

Accepted Answer

The U.S. Supreme Court found Standard Oil guilty of monopolizing the petroleum industry, violating the Sherman Antitrust Act by restricting trade and manipulating prices.

Question 12

Over the years since the early 1900s, the U.S. government's and courts' aggressiveness in interpreting and enforcing antitrust laws have
A)been generally increasing.
B)mostly been quite lax.
C)fluctuated between tough and lax.
D)been declining.

Accepted Answer

The U.S. government's and courts' approach to interpreting and enforcing antitrust laws has varied over time, showing periods of strict enforcement and periods of more lenient approaches. This fluctuation reflects changes in political, economic, and legal philosophies regarding market competition and regulation.

Question 13

The argument that a large firm dominating an industry will not necessarily act like a monopolist, as expressed in the 1920 U.S. Steel case, suggests that the application of antitrust laws should be based on firm
A)behavior.
B)structure.
C)efficiency.
D)concentration ratios.

Accepted Answer

The argument focuses on how a firm acts in the market rather than its size or market share, suggesting that antitrust laws should be applied based on the firm's behavior, such as pricing and competitive practices, rather than solely on its structure or market concentration.

Question 14

Which of the following cases established that the mere possession of monopoly power violated antitrust laws?
A)IBM case of 1982
B)Microsoft case of 1998
C)Alcoa case of 1945
D)AT&T case of 1982

Accepted Answer

The Alcoa case of 1945 (United States v. Alcoa) established that the mere possession of monopoly power, if such power is used to exclude competitors, violated antitrust laws. This case was significant in interpreting Section 2 of the Sherman Act regarding monopolization.

Question 15

Which of the following beliefs is not strongly espoused by the "laissez-faire perspective" in antitrust policy?
A)Competition among firms is a battle for dominance.
B)The focus of antitrust policy should be on market structure rather than behavior.
C)Competition and creative destruction could lead to monopolies.
D)Monopoly pricing and profits create incentives for firms that are economically beneficial.

Accepted Answer

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

Question 16

Which of the following statements is true?
A)The active antitrust perspective believes that competitive market forces will automatically and actively reduce a firm's monopoly power in the long run.
B)The active antitrust perspective believes that the government should play the role of officials and umpires and enforce the rules of the competitive game.
C)The laissez-faire perspective views firms as players in a competitive game who will sometimes violate the rules in order to gain a huge advantage over others.
D)The laissez-faire perspective believes that an active enforcement of antitrust policy is the only way to reduce the monopoly power of giant firms.

Accepted Answer

The active antitrust perspective supports government intervention to enforce competition rules, acting as officials and umpires in the market.

Question 17

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?
A)laissez-faire
B)Herfindahl
C)passive
D)active

Accepted Answer

The active antitrust perspective holds that competition alone may not always lead to allocative efficiency or fairness, thus necessitating regulatory intervention to correct market failures and protect consumers and competitors.

Question 18

Differences in the interpretation and the enforcement of antitrust laws are in part rooted on the issue of focus. One such issue pertains to the question of whether the policy focus should be on
A)domestic firms versus multinationals.
B)intrastate trade versus interstate trade.
C)monopoly output versus monopoly pricing
D)monopoly behavior versus monopoly structure.

Accepted Answer

The debate on whether antitrust laws should concentrate on the behavior of monopolies (how they act in the market) or their structure (the setup of the market that allows monopolies to exist) is a significant point of contention in the interpretation and enforcement of these laws. This focus impacts how regulations are applied and what aspects of a company's operations are scrutinized.

Question 19

Differences in the application of antitrust laws are in part rooted on the issue of how broadly antitrust authorities should define the relevant
A)market.
B)product.
C)price.
D)firm.

Accepted Answer

The definition of the relevant market is crucial in antitrust cases as it determines the boundaries within which competition is assessed. Different interpretations can lead to varying conclusions about the presence of monopolistic practices.

Question 20

The so-called rule of reason in interpreting antitrust legislation suggests that the application of antitrust laws should be based on industry
A)efficiency.
B)concentration ratios.
C)behavior.
D)structure.

Accepted Answer

The rule of reason in antitrust legislation focuses on the behavior of companies, assessing whether their actions have anticompetitive effects rather than strictly on the structure or concentration ratios of an industry.

Quiz 21: Antitrust Policy and Regulation

The U.S. Steel case of 1920 and the Alcoa case of 1945 dealt with which antitrust question?

The so-called rule of reason, based on the 1920 U.S. Steel case, stipulates that a merger of two firms in an industry is

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

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

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

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

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

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

In the 1911 Standard Oil case, the U.S. Supreme Court found Standard Oil

Over the years since the early 1900s, the U.S. government's and courts' aggressiveness in interpreting and enforcing antitrust laws have

The argument that a large firm dominating an industry will not necessarily act like a monopolist, as expressed in the 1920 U.S. Steel case, suggests that the application of antitrust laws should be based on firm

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

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

Which of the following statements is true?

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?

Differences in the interpretation and the enforcement of antitrust laws are in part rooted on the issue of focus. One such issue pertains to the question of whether the policy focus should be on

Differences in the application of antitrust laws are in part rooted on the issue of how broadly antitrust authorities should define the relevant

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