The rule of reason refers to the interpretation of the courts that dominant firms should be broken up because of their:
A) market share dominance, regardless of their business practices.
B) illegal business practices, not based on their market dominance alone.
C) marginal cost pricing, rather than average cost pricing.
D) average cost pricing, rather than marginal cost pricing.

Question

Quizplus · Accepted Answer

The rule of reason states that dominant firms should only be broken up if they engage in illegal business practices, not solely based on their market dominance. Market share dominance alone is not enough to trigger a breakup under the rule of reason. Additionally, the rule of reason does not specifically relate to pricing strategies, such as marginal or average cost pricing.

The Rule of Reason Refers to the Interpretation of the Courts