Question 1

What are the basic provisions of the National Cooperative Production Amendment Act?

Accepted Answer

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Question 2

The ______,a measure of market concentration,squares the market share of each firm in a market and adds them together for a final number.
A) Noerr-Pennington Index
B) Producer Price Index
C) Consumer Price Index
D) Herfindahl-Hirschman Index
E) Big Mac Index

Accepted Answer

The Herfindahl-Hirschman Index (HHI), a measure of market concentration, squares the market share of each firm in the market and adds them together for a final number. For example, if there are five firms in the market, each with a 20% share, the final HHI is 2,000 points. If two of those firms merge, the HHI would rise to 2,800 points.

Question 3

The primary function of the Federal Trade Commission is to
A) prevent illegal business practices.
B) award punitive damages for violations of the Sherman Act.
C) award punitive damages for violations of the Clayton Act.
D) prevent the formation of conglomerate mergers.
E) facilitate the use of exclusive dealing contracts for trade agreements.

Accepted Answer

The primary function of the Federal Trade Commission is to prevent illegal business practices rather than punish violations. It prevents wrongful actions by the use of cease and desist orders.

Question 4

If there are four firms in a market,each with a 25 percent share,the final Herfindahl-Hirschman Index is ______.
A) 4000 points
B) 2000 points
C) 25 points
D) 4 points
E) 2500 points

Accepted Answer

Market concentration is measured using the Herfindahl-Hirschman Index (HHI), which squares the market share of each firm in the market and adds them together for a final number. Squaring the market share of each firm gives 625. 625 times four is 2500.

Question 5

What are the two categories of analysis used to analyze potential violations of the Sherman Act? How do they work?

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Question 6

The cable operators in North Bedford agreed to divide the market among themselves with each operator assigned a specific region in the city.Briefly discuss the legality of this agreement in the context of the Sherman Act.

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Question 7

Which of the following statements is true of the antitrust enforcement in the European Union (EU)?
A) Fines for violating EU antitrust law are much less than those in the United States.
B) The EU may impose fines for business practices that do not violate U.S. law.
C) The EU can impose a maximum fine of 1 billion euros.
D) The European Commission does not have the power to change business practices related to activities that do not violate U.S. law.
E) The decisions of the European Commission must mirror that of the U.S. Government. .

Accepted Answer

The European Union (EU) may impose fines for business practices related to activities that do not violate U.S. law. In 2014, the European Commission and Google announced a settlement requiring Google to provide promotion space for rival advertisers when delivering results from a Google specialized search. This system will appear only in Europe.

Question 8

What led to the enactment of the Sherman Act in 1890?

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Question 9

When is the existence of a monopoly lawful?

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Question 10

The ______ made unfair or deceptive acts or practices in commerce illegal under Section 5 of the Federal Trade Commission Act.
A) Celler-Kefauver amendment
B) Noerr-Pennington amendment
C) Herfindahl-Hirschman amendment
D) Robinson-Patman amendment
E) Wheeler-Lea amendment

Accepted Answer

The Wheeler-Lea amendment in 1938 added that unfair or deceptive acts or practices in commerce are unlawful under Section 5 of the Federal Trade Commission Act. The original Section 5 of the Federal Trade Commission Act outlawed unfair methods of competition in commerce and directed the FTC to prevent the use of such, but it offered no definition of the specific practices that were unfair.
Short Answer Questions

Question 11

What must a plaintiff prove in a case concerning an attempt to monopolize?

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Question 12

Fields Tech School decides to expand and open a new campus in another state.Rather than acquiring land and building new buildings,the school board decides to merge with an existing school,Fennelstate,which has similar programs in the other state.Fennelstate is a small commuter school with the majority of the students from the same state.The merger between Fields Tech School and Fennelstate is best described as a ______.
A) vertical merger
B) geographic extension merger
C) product extension merger
D) horizontal merger
E) freeze-out merger

Accepted Answer

The merger between Fields Tech School and Fennelstate is best described as a market extension merger. A market extension merger describes an acquisition in which the acquiring company extends its markets. This market extension may be either in new products (product extension) or in new areas (geographic extension). As Fields Tech School extended its market to new areas, this merger would be best described as a market extension merger.

Question 13

What is the purpose of the Sherman Act and what does it cover?

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Question 14

What is per se illegality?

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Question 15

Briefly explain the concept of predatory conduct in trade.

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Question 16

What is horizontal price fixing? What are some of the unacceptable defenses for horizontal price fixing?

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Question 17

A(n)______ is one in which the businesses involved neither compete nor are related as customer and supplier in any given line of commerce.
A) arbitration merger
B) horizontal pricing arrangement
C) vertical pricing arrangement
D) conglomerate merger
E) vertical merger

Accepted Answer

A conglomerate merger is one in which the businesses involved neither compete nor are related as customer and supplier in any given line of commerce. Some analysts consider product extension and geographic extension mergers to be conglomerate ones with many characteristics of horizontal ones.

Question 18

How is it possible for a manufacturer to legally control the resale price of its products?

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Question 19

Briefly explain the rule of reason.

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Question 20

What are concerted activities?

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Quiz 16: Regulating Competitionantitrust Laws

What are the basic provisions of the National Cooperative Production Amendment Act?

The ______,a measure of market concentration,squares the market share of each firm in a market and adds them together for a final number.

The primary function of the Federal Trade Commission is to

If there are four firms in a market,each with a 25 percent share,the final Herfindahl-Hirschman Index is ______.