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Exam 47: Antitrust Law

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Question 21

True/False

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The Sherman Act attempts to stop trusts from unfairly restricting market competition.

A) True
B) False

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Question 22

Multiple Choice

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"On the Town." Benny began taking people on tours of historic sites in his town. That had not been done before because no one thought there was very much in the way of historical significance there. Benny, however, did some research; and, with a very active imagination on his part, came up with some good stories. He started to make a nice profit with the tours, particularly with tourists passing through the town on the way to the mountains. Benny began to hear of some rival tour groups that were planning to start giving tours in the area. Benny sent a memo to his secretary asking, "How can we shut down other potential tour groups because we want all the business?" One rival company had started operations, but Benny still had 85 percent of the business. His plan was to run the rival out of business and prevent the start-up of any other tour operations in his town. Benny decided that he would offer to do a free advertising brochure to any business that would put up a poster advertising his tour group and agree not to advertise or mention in any way any other tour group. Benny was particularly successful in reaching that agreement with hotels and restaurants in his town because of his likeable personality. When Prudence, who ran a rival tour group heard about Benny's actions, she was furious and accused him of an antitrust violation because he was trying to keep all the tour action for himself. Benny told Prudence she was nuts and that the only reason she had no business was that she stuck to dry historical fact on her tours and did not do research on romantic relationships between individuals in the area in order to "spice-up" her tours. He also told her that he was not a monopolist because he did not have all the business as evidenced by Prudence's own tour service. -The type of service Benny provides, tours, would be referred to as which of the following markets for purposes of determining the relevant market?

A) Product
B) Consumer
C) Offered
D) Utilized
E) Disputed

F) D) and E)
G) B) and C)

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Question 23

Multiple Choice

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Which of the following is false regarding enforcement of the Sherman Act?

"Adult Floaters." Bruce and Jimmy are both involved in businesses that manufacture bathing suits for ladies with small personal flotation devices implanted to assist with swimming. They both ship the suits to different states around the country. Bruce and Jimmy get together and decide to raise their prices. They decide that since they are the only two manufacturers of this type of suit, if they both stick together and raise prices to an agreed upon amount, then consumers will be forced to pay that amount. They want to make a lot of money before anyone else jumps into the market. A disgruntled secretary of Bruce finds out about the agreement and sends out letters to consumers revealing it. -Have Bruce and Jimmy violated the Sherman Act?

Which of the following is false regarding the Federal Trade Commission Act?

In enacting the Sherman Act, Congress did not specify which specific behaviors were prohibited.

The Federal Trade Commission has been eliminated.

"On the Town." Benny began taking people on tours of historic sites in his town. That had not been done before because no one thought there was very much in the way of historical significance there. Benny, however, did some research; and, with a very active imagination on his part, came up with some good stories. He started to make a nice profit with the tours, particularly with tourists passing through the town on the way to the mountains. Benny began to hear of some rival tour groups that were planning to start giving tours in the area. Benny sent a memo to his secretary asking, "How can we shut down other potential tour groups because we want all the business?" One rival company had started operations, but Benny still had 85 percent of the business. His plan was to run the rival out of business and prevent the start-up of any other tour operations in his town. Benny decided that he would offer to do a free advertising brochure to any business that would put up a poster advertising his tour group and agree not to advertise or mention in any way any other tour group. Benny was particularly successful in reaching that agreement with hotels and restaurants in his town because of his likeable personality. When Prudence, who ran a rival tour group heard about Benny's actions, she was furious and accused him of an antitrust violation because he was trying to keep all the tour action for himself. Benny told Prudence she was nuts and that the only reason she had no business was that she stuck to dry historical fact on her tours and did not do research on romantic relationships between individuals in the area in order to "spice-up" her tours. He also told her that he was not a monopolist because he did not have all the business as evidenced by Prudence's own tour service. -Which of the following violations would Prudence most likely be alleging with her claim that Benny was attempting to keep all the tour business for himself?

Which of the following is an inquiry into the competitive effects of a company's behavior to determine whether the benefits of the behavior outweigh the harm of the anticompetitive behavior?

Which of the following was the result on appeal in California v. Safeway, the case in the text involving whether an agreement between grocers to share revenues during the term of a labor dispute violated antitrust laws?

What must be shown in order to establish a violation of Section 1 of the Sherman Act?

Under the Clayton Act, the Department of Justice is most likely to challenge which of the following types of mergers?

Section 2 of the Sherman Act prohibits all monopolies.

When was the Interstate Commerce Act passed?

Which of the following was the result of the claim of the U.S. Department of Justice that Microsoft Corporation violated Sections 1 and 2 of the Sherman Act?

When one company at one level of the manufacturing-distribution system acquires a company at another level of the system, the merger is called a ______ merger.

By what U.S. Constitutional authority did Congress pass the Sherman Act?

Which analysis, if any, is applied to territorial and customer restrictions imposed by a manufacturer on a retailer?

"On the Town." Benny began taking people on tours of historic sites in his town. That had not been done before because no one thought there was very much in the way of historical significance there. Benny, however, did some research; and, with a very active imagination on his part, came up with some good stories. He started to make a nice profit with the tours, particularly with tourists passing through the town on the way to the mountains. Benny began to hear of some rival tour groups that were planning to start giving tours in the area. Benny sent a memo to his secretary asking, "How can we shut down other potential tour groups because we want all the business?" One rival company had started operations, but Benny still had 85 percent of the business. His plan was to run the rival out of business and prevent the start-up of any other tour operations in his town. Benny decided that he would offer to do a free advertising brochure to any business that would put up a poster advertising his tour group and agree not to advertise or mention in any way any other tour group. Benny was particularly successful in reaching that agreement with hotels and restaurants in his town because of his likeable personality. When Prudence, who ran a rival tour group heard about Benny's actions, she was furious and accused him of an antitrust violation because he was trying to keep all the tour action for himself. Benny told Prudence she was nuts and that the only reason she had no business was that she stuck to dry historical fact on her tours and did not do research on romantic relationships between individuals in the area in order to "spice-up" her tours. He also told her that he was not a monopolist because he did not have all the business as evidenced by Prudence's own tour service. -The relevant market would be considered in determining the company's ________ share.

Which of the following was the result on appeal in Spirit Airlines Inc., v. Northwest Airlines Inc., the case in the text in which Spirit Airlines claimed that Northwest Airlines lowered its prices on certain flights once Spirit Airlines began to compete?