Chapter 41_SmithandRoberson14ed_tb

Chapter 41_SmithandRoberson14ed_tb - Chapter 41Antitrust...

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Chapter 41—Antitrust TRUE/FALSE 1. The main goal of antitrust regulation is to prevent competitive behavior among firms. ANS: F PTS: 1 2. A corporation may be guilty of a criminal felony violation of the Sherman Act. ANS: T PTS: 1 3. The language of Section 1 of the Sherman Act prohibits every contract that restrains trade, and the courts have interpreted this prohibition literally so as to invalidate all such contracts. ANS: F PTS: 1 4. The "rule of reason" requires the courts to balance the anticompetitive effects of behavior in restraint of trade with its positive effects on competition. ANS: T PTS: 1 5. Antitrust law, as currently applied, focuses on the resulting entity’s absolute size. ANS: F PTS: 1 6. It is per se illegal under the Sherman Act to set a maximum price, but not a minimum price. ANS: F PTS: 1 7. All tying arrangements are per se illegal. ANS: F PTS: 1 8. The court interpretation of the Sherman Act results in the prohibition of monopolies only if a firm pos- sesses market power that it attained unfairly or it abused the monopoly power once attained. ANS: T PTS: 1 9. Determining how big the corporation is in terms of total assets is the prevalent test of monopoly power. ANS: F PTS: 1 10. The Clayton Act would not allow a suit to be brought before a monopoly exists. ANS: F PTS: 1 11. If one major U.S. car manufacturer acquired another, the Clayton Act would require close scrutiny of the transaction. ANS: T PTS: 1
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12. Tying arrangements have been labeled by the Supreme Court as serving "hardly any purpose beyond the suppression of competition." ANS: T PTS: 1 13. The Robinson-Patman Act adds to the Clayton Act merger provisions. ANS: F PTS: 1 14. All price discrimination is illegal under the Robinson-Patman Act. ANS: F PTS: 1 15. If United Widgets lowers its price to all buyers of 10 or more widgets, it is not a violation of the Robinson-Patman Act. ANS: T PTS: 1 16. The Federal Trade Commission can act like a judicial body in conducting hearings and issuing orders to cease and desist. ANS: T PTS: 1 17. The Clayton Act weakened the Sherman Act by eliminating illegal acts that had previously been pro- hibited. ANS: F PTS: 1 18. The principal objective of antitrust law governing mergers is to maintain competition. ANS: T PTS: 1 19. Section 1 of the Sherman Act prohibits unilateral conduct. ANS: F PTS: 1 20. Group boycotts are illegal per se . ANS: F PTS: 1 21. The Clayton Act deals with interlocking directorates. ANS: T PTS: 1 22. The more narrowly that a product market is defined as being, the more likely that the firm will be found to possess monopoly power. ANS: T PTS: 1 23. The Sherman Act contains both civil and criminal penalties. ANS: T PTS: 1
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24. A wholesale manufacturer gets a retail outlet for its goods through a merger. This is a horizontal mer- ger.
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Chapter 41_SmithandRoberson14ed_tb - Chapter 41Antitrust...

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