Chapter 21 Antitrust Policy and Regulation Answer Key
Multiple Choice Questions
1.
All of the following can file antitrust charges under the Sherman Act except
A.
the U.S. Justice Department.
2.
Movie producers A, B, and C secretly meet and agree to release their summer
blockbuster films in sequence, rather than at the same time. The U.S. Justice Department
learns of
the agreement and files an antitrust suit. The federal government would most
likely file charges under the
D.
Federal Trade Commission Act.
3.
Which of the following is least likely to violate the Sherman Act or the Clayton Act?
A.
Competitive firms A, B, and C meet and agree to charge a common price.
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D. Large dominant firm H forces buyers to purchase its product X in order to buy its
popular product Y.
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Blooms: Remember
D i f f i c u l ty : 01 Easy
Learning Objective: 21–01 List and explain the core elements of the major antitrust
antimonopoly laws in the United States.
Test Bank: I
Topic: The Antitrust Laws
4.
The Sherman Act was designed to
A.
exempt commercial banks from the antitrust laws.
5.
Which one of the following acts declared “every contract, combination . . . or conspiracy,
in restraint of trade or commerce among the several states . . . to be illegal”?
A.
the Wheeler-Lea Act
6.
The Clayton Act of 1914
C.
outlawed vertical and conglomerate mergers.
D.
prohibited one firm from acquiring the assets of another when the effect was to limit
competition.
7.
A function of the Federal Trade Commission is to
D.
prevent insider trading in securities markets.
8.
Which one of the following is not prohibited by the original Clayton Act?
A. the purchase of the stocks of rival firms that lessens competition
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A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Remember
D i f f i c u l ty : 01 Easy
Learning Objective: 21–01 List and explain the core elements of the major antitrust
antimonopoly laws in the United States.
Test Bank: I
Topic: The Antitrust Laws
9.
Which of the following is directly illegal under the Sherman Act?
A.
price discrimination
Topic: The Antitrust Laws
10.
Tying contracts are illegal under the
A. Wagner Act of 1935.
11.
Suppose Slow Ketchup requires that, as a condition of purchase, all restaurants using its
product must buy and make available its new sales product. This arrangement is an
example of
A.
price-fixing.
12.
Which of the following laws prohibited mergers by stock acquisition if the effect was to
lessen competition?
A.
Celler-Kefauver Act of 1950
13.
Which of the following gave the Federal Trade Commission responsibility to protect the
public against false and misleading advertising?
A. Celler-Kefauver Act of 1950
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antimonopoly laws in the United States.
Test Bank: I
Topic: The Antitrust Laws
14.
Which of the following amended the Clayton Act’s prohibition against mergers that
substantially lessen competition?
D.
Sherman Act of 1890
15.
Which of the following made monopoly and restraints of trade criminal offenses against
the federal government?
A.
Celler-Kefauver Act of 1950
16.
Tying agreements
A. establish common boards of directors for previously competing firms.
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written consent of McGraw-Hill Education.
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A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Remember
D i f f i c u l ty : 01 Easy
Learning Objective: 21–01 List and explain the core elements of the major antitrust
antimonopoly laws in the United States.
Test Bank: I
Topic: The Antitrust Laws
17.
Responsibility for enforcing the antitrust laws rests
A. with the Interstate Commerce Commission.
18.
The Celler-Kefauver Act of 1950
A.
outlawed price-fixing.
19.
The Celler-Kefauver Act of 1950
A. modified patent legislation by reducing the number of years over which a patent is
applicable.
20.
Suppose the courts declare that XYZ Corporation violated the antitrust laws and as a
result ABC Corporation lost $100 million of profits. XYZ Corporation will have to pay
ABC Corporation a monetary award of
A.
$100 million.
21.
Price-fixing
A. is prohibited by Section 7 of the Clayton Act.
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written consent of McGraw-Hill Education.
Blooms: Remember
D i f f i c u l ty : 01 Easy
Learning Objective: 21–01 List and explain the core elements of the major antitrust
antimonopoly laws in the United States.
Test Bank: I
Topic: The Antitrust Laws
22.
The antitrust laws are based on the
A. creative destruction view of competition.
23.
The Sherman Act
A.
was declared unconstitutional in 1895.
24.
The main purpose of the antitrust laws is
A.
to encourage firms to produce where P > MC.
written consent of McGraw-Hill Education.
25.
The antitrust laws are enforced by the
A.
Federal Bureau of Investigation.
26.
Interlocking directorates are
A.
legal if the two firms have small market shares.
Topic: The Antitrust Laws
27.
The Federal Trade Commission
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written consent of McGraw-Hill Education.
A.
is empowered to hold public hearings to investigate unfair practices.
B.
prohibits interlocking directorates in interstate industries.
C.
regulates airline fares.
D.
regulates such transportation industries as railroads and trucking.
28.
The government was successful in gaining an antitrust conviction in the
A.
U.S. Steel case.
29.
In which of the following cases did the final court decision result in a breakup of the
firm into competing businesses?
A. Microsoft case
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written consent of McGraw-Hill Education.
Blooms: Understand
D i f f i c u l ty : 02 Medium
Learning Objective: 21–02 Describe some of the key issues relating to the interpretation
and application of antitrust laws.
Test Bank: I
Topic: Antitrust Policy: Issues and Impacts
30.
In which of the following cases was the firm found not guilty of violating the Sherman
Act?
A.
Standard Oil case
31.
In the Microsoft antitrust case, the federal government said in essence that
A. the mere presence of monopoly violated the Sherman Act, irrespective of Microsoft’s
behavior.
32.
In which of the following sets of antitrust cases did the government gain convictions?
A. the U.S. Steel case and the Microsoft case
33.
In which of the following pairs of antitrust cases did the firms prevail against the
antitrust charges leveled against them?
A.
the Alcoa case and the Microsoft case
34.
The “rule of reason” indicated that
A.
if less than four firms account for three-fourths of an industry‘s sales, the industry is in
violation of the Sherman Act.
21–14
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written consent of McGraw-Hill Education.
Learning Objective: 21–02 Describe some of the key issues relating to the interpretation
and application of antitrust laws.
Test Bank: I
Topic: Antitrust Policy: Issues and Impacts
35.
In the Alcoa case of 1945, the courts held that
D.
firms that sell more than one-half of their output overseas are exempt from antitrust.
36.
The basic issue in the DuPont cellophane case was
A. whether trade crossed state lines.
37.
Suppose a court rules that the ABC Corporation is in violation of the antitrust laws
because it produces 70 percent of the output of its industry. This decision is consistent with
the
A. U.S. Steel case.
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C.
behavioralist approach to antitrust.
D.
legal cartel theory of regulation.
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Blooms: Understand
D i f f i c u l ty : 02 Medium
Learning Objective: 21–02 Describe some of the key issues relating to the interpretation
and application of antitrust laws.
Test Bank: I
Topic: Antitrust Policy: Issues and Impacts
38.
The Alcoa case
D.
decision was consistent with a behavioralist approach.
39.
In the U.S. Steel case of 1920, the courts held that
A.
the structure of an industry is more important than its behavior in determining violations
of the antitrust laws.
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Test Bank: I
Topic: Antitrust Policy: Issues and Impacts
40.
Restructuring of a major industry resulted from the
A. U.S. Steel case.
41.
In the U.S. Steel case, the court ruled that
A. even though a firm’s behavior might be legal, the mere possession of monopoly power
was in violation of the Sherman Act.
42.
The decision in the U.S. Steel case
D.
ruled that U.S. Steel had engaged in illegal price-fixing.
43.
Which of the following is most likely to increase the Herfindahl index of a particular
industry?
D.
an agreement by all the industry firms to divide up the market among them
44.
Which of the following findings would be the most likely to lead the U.S. Justice
Department to block a corporate merger under terms of the Clayton Act?
A. a buyer-seller relationship between the two firms
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Topic: Antitrust Policy: Issues and Impacts
45.
A merger between an automobile manufacturer and a maker of automobile tires is an
example of a
A.
conglomerate merger.
46.
Which one of the following is most likely to increase the Herfindahl index of a
particular industry?
A.
a conglomerate merger
47.
A merger between a maker of household detergents and a fast-food chain would be an
example of
A.
a horizontal merger.
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AACSB: Knowledge Application
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Understand
D i f f i c u l ty : 02 Medium
Learning Objective: 21–02 Describe some of the key issues relating to the interpretation
and application of antitrust laws.
Test Bank: I
Topic: Antitrust Policy: Issues and Impacts
48.
A conglomerate merger
D.
is illegal, per se.
49.
A vertical merger involves a combining of one or more firms
A.
as the result of one firm purchasing the assets of the other.
50.
A merger of several firms operating in different industries—for example, a trucking
company, a fast—food chain, and a brokerage house—is called
A. an integrated merger.
51.
Structuralists take the position that
A.
the rule of reason is appropriate and desirable in interpreting the Sherman Act.
52.
Behavioralists believe that
A. if four or fewer firms control more than half of the market for a product, then the
Sherman Act is being violated.