21–41
Topic: Antitrust Policy: Issues and Impacts
100.
(Last Word) In 2015, Google was indicted by European Union antitrust officials for
A. conspiring with Microsoft to ensure that Google and Microsoft products were bundled.
Chrome.
101.
(Last Word) What problem is created for antitrust regulators by online pricing
algorithms?
D.
Online pricing algorithms are programmed to ensure that there is just enough of a gap
between prices across firms that collusion would be impossible to prove.
True / False Questions
102.
Price-fixing is illegal under Section 1 of the Sherman Act.
103.
Monopolization is illegal under Section 1 of the Sherman Act.
104.
The U.S. Justice Department, the Federal Trade Commission, state attorneys general,
and injured private parties can independently file charges against firms under the Sherman
Act.
105.
Anticompetitive mergers are illegal under provisions of the Clayton Act (as amended).
21–43
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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 if f i cu l t y: 02 Medium
Learning Objective: 21-01 List and explain the core elements of the major antitrust
antimonopoly laws in the United States.
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
Topic: The Antitrust Laws
106.
Proposed ergonomics regulations are an example of industrial regulation (rather than
social regulation).
107.
Tying agreements are contracts by which retailers agree to charge the prices that
manufacturers set on branded goods.
108.
The Celler-Kefauver Act outlawed interlocking directorates.
FA LSE
21–44
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written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Remember
D if f i cu l t y: 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
109.
The regulation of natural monopolies has been criticized because it creates a tendency
for regulated firms to use too much labor and too little capital in the production process.
110.
The Celler-Kefauver Act made vertical mergers legal, provided each firm does not
have more than 30 percent of its relevant market.
111.
The legal cartel theory indicates that in any industry where market demand and the
long-run average total cost curve intersect close to the latter’s minimum, government
regulation
is mandatory and desirable.
21–45
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written consent of McGraw-Hill Education.
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Understand
D if f i cu l t y: 02 Medium
Learning Objective: 21–03 Identify and explain the economic principles and difficulties
relating to the setting of prices rates charged by so-called natural monopolies.
Learning Objective: 21–04 Discuss the nature of social regulation, its benefits and costs,
and its optimal level.
Test Bank: I
Topic: Industrial Regulation
To pi c : Social Regulation
112.
The Consumer Product Safety Commission engages in social regulation, rather than
industrial regulation.
113.
The Americans with Disabilities Act of 1990 is an example of industrial regulation.
Multiple Choice Questions
114.
Laws and government actions designed to prevent monopoly and to promote
competition are the focus of
A.
social regulation.
21–46
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written consent of McGraw-Hill Education.
B.
industrial regulation.
C.
antitrust policy.
D. incomes policy.
115.
Government regulation of firms’ prices or “rates” in selected industries is the focus of
A. social regulation.
116.
Antitrust laws are essentially
D.
anti-competition.
117.
The basic purpose of antitrust laws is to
A. provide subsidies for American business.
118.
Dominant firms that formed in several industries in the U.S. in the 1870s and 1880s,
which assigned control to a single decision group, were referred to as
D.
single-seller monopoly.
119.
Which of the following results will not occur in a monopolistic market?
A.
The monopolist will maximize profits by setting a price that‘s higher than marginal cost.
21–48
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written consent of McGraw-Hill Education.
D if f i cu l t y: 01 Easy
Learning Objective: 21–01 List and explain the core elements of the major antitrust
antimonopoly laws in the United States.
Test Bank: II
Topic: The Antitrust Laws
120.
The cornerstone of antitrust legislation in the U.S. is the
A. Clayton Act.
121.
The Sherman Act of 1890 outlawed
A.
monopoly pricing and foreign trade.
122.
Which antitrust act provided that injured parties could file suit and, if successful,
collect triple damages from monopolistic violators?
A.
Wheeler-Lea Act
21–49
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written consent of McGraw-Hill Education.
D. Celler-Kefauver Act
123.
The legislation that prohibited “every contract . . . or conspiracy, in restraint of trade
and commerce” is the
A.
Federal Trade Commission Act.
124.
Those who may file antitrust lawsuits against violators of the Sherman Act include the
following, except
A.
injured private parties.
125.
Which act specifically outlawed price discrimination when such discrimination is not
justified on the basis of cost differences and when it reduces competition?
A. Sherman Act
126.
Tying contracts, which is prohibited under the Clayton Act, refers to the situation
where a producer requires that a buyer
D. cannot ever resell the product bought.
127.
If a buyer who wants product A is required by the seller to buy its products B and C as
well, this is called
A.
an exclusive contract.
21–51
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written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Remember
D if f i cu l t y: 01 Easy
Learning Objective: 21–01 List and explain the core elements of the major antitrust
antimonopoly laws in the United States.
Test Bank: II
Topic: The Antitrust Laws
128.
Suppose that you own a toy store and want to buy 100 talking robots. Your supplier
will sell you the robots only if you also agree to buy 200 dolls. This is an illegal practice
called
A. monopolistic.
129.
Which of the following gave the Federal Trade Commission and the U.S. Justice
Department the responsibility to enforce antitrust laws?
A.
the Sherman Act
130.
Which act sharpened and clarified the provisions of the Sherman Act and sought to
outlaw the techniques that firms might use to gain monopoly power?
D.
Federal Trade Commission Act
131.
A major shortcoming of the Sherman Act was that
A.
it was too specific.
132.
Interlocking directorates refers to a situation where
C.
competing firms have separate and different members in their boards.
D.
a company‘s board splits into two rival camps locked in constant struggle.
21–53
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written consent of McGraw-Hill Education.
D if f i cu l t y: 01 Easy
Learning Objective: 21–01 List and explain the core elements of the major antitrust
antimonopoly laws in the United States.
Test Bank: II
Topic: The Antitrust Laws
133.
The legislation that prohibits the acquisition of assets of another company if the
transaction would significantly reduce competition, thereby closing a loophole in the
Clayton Act,
is the
A.
Sherman Act.
134.
The legislation that prohibited acquisition of stock of another company if this would
significantly lessen competition is the
A. Federal Trade Commission Act.
135.
Anticompetitive price discrimination, interlocking directorates, and tying contracts
were banned by the
A. Federal Trade Commission Act.
136.
The administrative agency charged with enforcing the provisions of the Clayton Act
(1914) was established by additional legislation in the same year. This legislation was the
A.
Celler-Kefauver Act.
137.
The agency responsible for investigating instances of fraudulent or misleading
advertising is the
D.
Uniform Business Practices Commission.
21–55
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written consent of McGraw-Hill Education.
antimonopoly laws in the United States.
Test Bank: II
Topic: The Antitrust Laws
138.
The Clayton Act prohibits the acquisition of of competing corporations when the
acquisition would lessen competition; the Celler-Kefauver Act prohibits the
acquisition of
of one firm by another firm when the acquisition would lessen competition.
D.
stock; bonds
139.
Which of the following does not necessarily violate antitrust laws?
A. deceptive advertising
140.
Over the years since the early 1900s, the U.S. government’s and courts’ aggressiveness
in interpreting and enforcing antitrust laws have
A.
been generally increasing.
21–56
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D. been declining.
141.
Differences in the interpretation and the enforcement of antitrust laws are in part
rooted on the issue of focus. One such issue pertains to the question of whether the policy
focus
should be on
A.
domestic firms versus multinationals.
142.
Differences in the application of antitrust laws are in part rooted on the issue of how
broadly antitrust authorities should define the relevant
D.
firm.
21–57
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Topic: Antitrust Policy: Issues and Impacts
143.
In the 1911 Standard Oil case, the U.S. Supreme Court found Standard Oil
A.
guilty of tax evasion for merger activity.
144.
The so-called rule of reason, based on the 1920 U.S. Steel case, stipulates that a
merger of two firms in an industry is
A.
illegal if the firms are large.
145.
The U.S. Steel case of 1920 and the Alcoa case of 1945 dealt with which antitrust
question?
A. To what extent should firms be limited in buying plant and equipment from other firms?
21–58
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A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Understand
D if f i cu l t y: 02 Medium
Learning Objective: 21–02 Describe some of the key issues relating to the interpretation
and application of antitrust laws.
Test Bank: II
Topic: Antitrust Policy: Issues and Impacts
146.
The argument that a large firm dominating an industry will not necessarily act like a
monopolist, as expressed in the 1920 U.S. Steel case, suggests that the application of
antitrust
laws should be based on firm
D.
concentration ratios.
147.
The view that the mere possession of monopoly power is a violation of the antitrust
laws, as in the Alcoa case of 1945, suggests that the application of antitrust laws should be
based on industry
A.
behavior.
148.
The so–called rule of reason in interpreting antitrust legislation suggests that the
application of antitrust laws should be based on industry
149.
Which of the following cases established that the mere possession of monopoly power
violated antitrust laws?
A.
IBM case of 1982
150.
Which of the following U.S. Supreme Court cases ruled that only monopolies that
“unreasonably restrain trade” are violating antitrust laws?
A. DuPont cellophane case of 1956
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written consent of McGraw-Hill Education.
Blooms: Understand
D if f i cu l t y: 02 Medium
Learning Objective: 21–02 Describe some of the key issues relating to the interpretation
and application of antitrust laws.
Test Bank: II
Topic: Antitrust Policy: Issues and Impacts
151.
Intel‘s monopoly in the sale of microchips for personal computers would be
considered
D.
illegal by “behavioralists” but legal by “structuralists.”
152.
The decision on the DuPont cellophane case of 1956 dealt with the issue of
A. unfair advertising practices.
153.
Which of the following statements is true?
A.
“Behavioralists” believe that all monopolists are “bad” monopolists.