Question 1

Vertical restraints are agreements between:

Accepted Answer

Vertical restraints are agreements between noncompetitors.

Question 2

Which of the following is not one of the steps in a three-step test for attempted monopolization under the Sherman Act?

Accepted Answer

There is not a requirement that the entity form an agreement with others in order to attempt to create a monopoly.

Question 3

Which act was designed to prevent monopolies from being created through mergers?

Accepted Answer

The Clayton Act was designed to prevent monopolies from being created through mergers.

Question 4

Which of the following was the first major antitrust law?

Accepted Answer

The Sherman Act came first, in 1890.

Question 5

Horizontal restraints are agreements between:

Accepted Answer

Horizontal restraints are agreements between competitors.

Question 6

Which economist/philosopher is cited in support of frequent meetings being circumstantial evidence of anticompetitive collusion?

Accepted Answer

Smith's Wealth of Nations is the source typically cited for this proposition.

Question 7

The Robinson-Patman Act makes it illegal for a business entity to discriminate in price "between different purchasers of commodities of like quality or grade." In order to violate this act, the business must:

Accepted Answer

A violation of the Robinson-Patman Act requires that a business make two or more sales to different purchasers at different prices.

Question 8

Which of the following agencies enforces federal antitrust laws?

Accepted Answer

The FTC enforces various antitrust laws.

Question 9

Joe and Arthur each own a chain of restaurants. In order to ensure successful restaurants, Joe and Arthur enter into an agreement that Joe will open his new locations in Kansas City but not St. Louis and Arthur vice versa. This is an example of:

Accepted Answer

This is an example of market allocation because each owner is agreeing on limiting his market.

Question 10

If there is no direct evidence of an agreement to manipulate the competitive market between two CEOs, a prosecutor may use their calendars and subsequent actions that were not in the usual course of business as circumstantial evidence to prove the ________ requirement of an antitrust violation.

Accepted Answer

Prosecutors may use circumstantial evidence to prove the necessary element of meeting of the minds.

Question 11

There are two ice cream stands at the same intersection. In order to protect their businesses, the two owners agree that they will charge their customers the same prices for an ice cream cone. What type of horizontal restraint is this?

Accepted Answer

Price-fixing occurs when two or more parties agree on a price for certain goods.

Question 12

When is a monopoly illegal under the Sherman Act?

Accepted Answer

Monopolies are illegal under the Sherman Antitrust Act when they are acquired or maintained through prohibited conduct.

Question 13

Which of the following is not a type of horizontal restraint?

Accepted Answer

A tying agreement is a form of vertical restraint.

Question 14

Modern antitrust law's focus is on:

Accepted Answer

Modern antitrust law is concerned with protecting the competitive process.

Question 15

In Texaco Inc. v. Dagher et al., two oil refiners and gas suppliers, Texaco and Shell Oil, entered into a joint venture called Equilon to consolidate their operations in the western United States. Historically, Texaco and Shell were competitors, but for their joint venture they shared expenses and profits equally. The products produced by Equilon were sold under the brand names Texaco and Shell at a mutually agreed-upon price. Texaco and Shell retailers brought a class action lawsuit against the two companies, claiming there was a per se violation of the Sherman Antitrust Act because of the lack of price competition. The court held that:

Accepted Answer

The court held that a market analysis was relevant and therefore a rule of reason standard should apply.

Question 16

The U.S. Supreme Court held that the Sherman Act applies to commercial agreements in which the parties acted in ________ manner.

Accepted Answer

The Supreme Court held that the statute applies only to parties that have acted in an unreasonable manner.

Question 17

The law firm of Smith, Brown, and Jones has just held a meeting in which the three partners decided that all fees charged by each of them will be $500 per hour with no exceptions. They also set nonnegotiable fees for such things as preparation of wills, real estate settlements, and other types of standard cases. Smith, Brown, and Jones:

Accepted Answer

The firm has not colluded with anyone, and the partners may set prices for their services as they wish.

Question 18

The University of Dover and Dover University are bitter cross-town rivals. They compete in everything from sports to academics. The schools, because of shrinking enrollment, make an agreement to give all incoming students free tuition for one semester before raising the existing rates the following semester. This action would be considered:

Accepted Answer

This is a meeting of the minds to commit a horizontal restraint of trade.

Question 19

Which act does the Robinson-Patman Act amend?

Accepted Answer

The Robinson-Patman Act amends the Clayton Act.

Question 20

Which of the following is an example of a tying agreement?

Accepted Answer

In a tying agreement, the buyer must purchase the second item in order to buy the first.

Quiz 20: Antitrust and Regulation of Competition