Chapter 37
Antitrust Law:
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1. The Clayton Act is not required to analyze price discrimination between different buyers of like commodities when the effect may be to substantially lessen competition.
a. True
b. False

2. The commerce clause allows the federal government to regulate all methods of intrastate transportation and communication.
a. True
b. False

3. The Federal Trade Commission is authorized to administer the law prohibiting unfair methods of competition.
a. True
b. False

4. Horizontal agreements are agreements between competitors.
a. True
b. False

5. The Frank Sexton Enterprises Inc v. Sodiaal North America Corp case involved allegations of violation of the Robinson-Pattman Act.
a. True
b. False

6. Agreements fixing prices for a good purpose, for example, vertical price fixing, are legal.
a. True
b. False

7. A person who is harmed by a conspiracy that violates the Sherman Antitrust Act can sue the wrongdoers for four times the actual damages.
a. True
b. False

8. Zappit2U, Inc., manufacturer of razors, entered into a contract with Wal-Smart Department stores under which Wal-Smart agreed not to carry any razors other than Zappit's. Exclusive dealing contracts are per se illegal.
a. True
b. False

9. Better Gardens, Inc. introduced a garden tool. The demand for the tool was incredible. To capitalize on the demand, Better Gardens established a policy requiring its retailers to buy plant food to get the garden tool. Better Garden's policy is a tying arrangement prohibited by the Clayton Act.
a. True
b. False

10. Microswift Software has 91% of the computer market in the town of Odessa. This is a per se violation of Section 2 of the Sherman Act.
a. True
b. False

11. Assume that Anahid, Inc., Hovanoush, Inc., and Khosrofuhi, Inc., collectively control 75% of the Midwest market for tahini (sesame paste). In order to control costs and reduce needless conflict, the three companies agree that Anahid will sell tahini in Michigan, Hovanoush will sell tahini in Ohio, Khosrofuhi will sell tahini in Indiana, and none of the firms will attempt to obtain any of the others' sales in those territories. This agreement is:
a. a horizontal market division.
b. price fixing.
c. a vertical market division.
d. a group boycott.

12. For purposes of Section 2 of the Sherman Act, what is the relevant product market?
a. The market for only those products produced by the defendant firm.
b. The market for those products that are identical to the products sold by the defendant firm.
c. The market for those products that are likely to be substituted for the products sold by the defendant firm.
d. The market for all products in the relevant geographic area.

13. What is the difference between a horizontal restraint and a vertical restraint?
a. A horizontal restraint is an agreement between firms at different levels of the production and distribution process, while a vertical restraint is an agreement between firms that are competing with each other at the same level.
b. A horizontal restraint is an agreement between firms that are competing with each other at the same level, while a vertical restraint is an agreement between firms at different levels of the production or distribution process.
c. A horizontal restraint is a violation of Section 2 of the Sherman Act, while a vertical restraint is a violation of Section 1.
d. A horizontal restraint is a violation of Section 1 of the Sherman Act, while a vertical restraint is a violation of Section 2.

14. Home Living offered customers the following options:

American Flag with pole  $74.95
Flag pole  $54.95
Flag  $29.95

In offering the flag and pole as a set, Home Living:

a. has violated antitrust law. This is an illegal tying arrangement.
b. has violated antitrust law. This is illegal price discrimination.
c. has violated antitrust law. This is vertical price maintenance.
d. not violated antitrust law.

15. Which of the following situations is a per se violation of the antitrust laws?
a. A decision by a manufacturer not to do business with a wholesaler.
b. Setting an unreasonably high price for a new product.
c. An agreement between several competitors to refrain from marketing their products in certain states.
d. None of these are per se violations.



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