Chapter 13—Antitrust and Regulation
MULTIPLE CHOICE
1. The purpose of antitrust laws is to:
a.
reduce anticompetitive activities.
c.
guarantee worker safety.
b.
regulate electric companies.
d.
promote quality products.
2. A firm that places its assets in the custody of a board of trustees is called a:
a.
trust.
c.
cartel.
b.
combination.
d.
all of these.
3. Firms that place their assets in the custody of a board of trustees is called a(n):
a.
utility.
c.
trust.
b.
oligopoly.
d.
all of these.
4. The practice of firms temporarily reducing prices in order to eliminate competition is called:
a.
competitive pricing.
c.
discount pricing.
b.
predatory pricing.
d.
strategic pricing.
5. Officers of five large building-materials companies meet and agree than none of them will submit bids
on government contracts lower than an agreed-upon level. This is an example of:
a.
price fixing.
c.
a tying contract.
b.
vertical restriction.
d.
an interlocking directorate.
6. “Good” trusts were exempt from antitrust prosecution under the:
a.
per se rule.
b.
Sherman Act.
c.
Clayton Act.
d.
rule of reason.
7. Competitive firms X, Y, and Z meet in secret and agree to charge the same price. The U.S. Justice
Department discovers this agreement and would most likely file charges under the:
a.
Clayton Act.
b.
Federal Trade Commission Act.
c.
Sherman Act.
d.
Tying Contracts Act.
8. The Sherman Antitrust Act:
a.
prohibited restraint of trade.
b.
created the Federal Trade Commission.
c.
prohibited fraudulent advertising.
d.
regulated the railroads.
9. What act of Congress declared restraint of trade illegal and declared any attempt at monopolizing
unlawful?
a.
Celler-Kefauver Act.
c.
Clayton Act.
b.
Sherman Antitrust Act.
d.
Robinson-Patman Act.
10. The Sherman Antitrust Act was passed in:
a.
1890.
c.
1929.
b.
1914.
d.
1933.
11. The first federal antitrust law was the:
a.
Clayton Act.
c.
Sherman Antitrust Act.
b.
Federal Trade Commission Act.
d.
Interstate Commerce Act.
12. The antitrust law that prohibits firms from combining or conspiring to restrain trade in interstate
commerce is the:
a.
Federal Trade Commission Act.
c.
Sherman Antitrust Act.
b.
Clayton Act.
d.
Robinson-Patman Act.
13. If one software company conspired with another software company to raise prices, this would be in
violation of the:
a.
Federal Trade Commission Act.
c.
Sherman Antitrust Act.
b.
Clayton Act.
d.
Robinson-Patman Act.
14. If two or more firms combine or conspire to monopolize trade, this would be in violation of the:
a.
Federal Trade Commission Act.
c.
Sherman Antitrust Act.
b.
Clayton Act.
d.
Robinson-Patman Act.
15. If two or more firms collude to fix prices, this would be outlawed by the:
a.
Federal Trade Commission Act.
c.
Robinson-Patman Act.
b.
Clayton Act.
d.
Sherman Antitrust Act.
16. The Sherman Antitrust Act of 1890 is the federal antitrust law that prohibits:
a.
monopolization and conspiracies to restrain trade.
b.
mergers the substantially lessen competition.
c.
exclusive dealing, tying contracts, and interlocking directorates.
d.
unfair methods of competition in commerce.
17. Which antitrust act prohibits price fixing and other conspiracies and combinations that restrain trade
and attempts to monopolize?
a.
Sherman Antitrust Act of 1890.
b.
Clayton Act of 1914.
c.
Federal Trade Commission Act of 1914.
d.
Robinson-Patman Act of 1936.
e.
Cell-Kefauver Act of 1950.
18. Which of the following is illegal under the Sherman Antitrust Act?
a.
Attempts to monopolize.
b.
Price fixing.
c.
Formation of cartels.
d.
All of these are illegal under the Sherman Antitrust Act.
19. In order to obtain a conviction for price fixing under the Sherman Antitrust Act, the government needs
to prove:
a.
only that an attempt to fix prices was made.
b.
that there was a price-fixing agreement that actually lessened competition.
c.
that there was a high concentration ratio for the industry.
d.
all of these.
20. The first major piece of antitrust legislation was:
a.
Clayton Act.
b.
Celler-Kefauver Act.
c.
Sherman Antitrust Act.
d.
Rockefeller Act.
e.
Robinson-Patman Act.
21. The most important weakness of the Sherman Antitrust Act was that:
a.
the Supreme Court refused to enforce it.
b.
it wasn’t specific about the types of acts which would violate the law.
c.
it didn’t outlaw restraints of trade.
d.
it was too complicated.
e.
it was too specific.
22. The Sherman Antitrust Act is primarily concerned with:
a.
mergers.
b.
nationalization.
c.
price discrimination.
d.
monopolization.
e.
unfair and deceptive practices.
23. The primary purpose of antitrust legislation is to:
a.
protect small business.
b.
protect the competitiveness of U.S. business.
c.
protect the prices of American-made products.
d.
ensure American labor is paid a fair wage.
e.
ensure firms earn only a fair profit.
24. The Sherman Antitrust Act:
a.
prohibited restraint of trade.
b.
created the Federal Trade Commission.
c.
prohibited fraudulent advertising.
d.
regulated the railroads.
25. What act of Congress declared restraint of trade illegal and declared any attempt at monopolizing
unlawful?
a.
Celler-Kefauver Act.
c.
Clayton Act.
b.
Sherman Antitrust Act.
d.
Robinson-Patman Act.
26. Under the original Clayton Act, which of the following was not illegal?
a.
Charging different prices for the same product.
b.
Exclusive dealer agreements.
c.
The purchase of the stock of a rival firm that lessens competition.
d.
The purchase of the assets of a rival firm that lessens competition.
27. Which of the following is illegal under Clayton Act of 1914?
a.
Charging different prices for the same product.
b.
Exclusive dealer agreements.
c.
Tying contracts.
d.
The purchase of the assets of a rival firm that lessens competition.
28. The Clayton Act of 1914:
a.
was too vaguely worded to reduce anticompetitive behavior significantly
b.
prohibited conspiracies in restraint of trade
c.
prohibited price discrimination that reduces competition and cannot be justified based on
cost differences
d.
created the Federal Trade Commission
29. Which of the following practices is prohibited by the Clayton Act?
a.
Price discrimination that substantially lessens competition.
b.
Tying contracts that substantially lessen competition.
c.
Exclusive dealing that substantially lessens competition.
d.
All of these.
30. Which act of Congress declared tying contracts, exclusive dealing, and price discrimination illegal?
a.
Celler-Kefauver Act.
c.
Clayton Act.
b.
Sherman Antitrust Act.
d.
Robinson-Patman Act.
31. Which of the following is an amendment that strengthened the Sherman Antitrust Act?
a.
Celler Kefauver Act.
c.
Robinson-Patman Act.
b.
Clayton Act.
d.
Tyler Act.
32. Price discrimination that tends to lessen competition is outlawed by the:
a.
Sherman Antitrust Act.
c.
Federal Trade Commission Act.
b.
Clayton Act.
d.
Interstate Commerce Act.
33. A retailer cannot sell Campbell Soup if it also sells other brands of soup. This is an example of:
a.
resale price maintenance.
c.
a tying agreement.
b.
price discrimination.
d.
exclusive dealing.
34. If a firm has a tying agreement with a distributor which substantially lessens competition, then it is
likely to be in violation of the:
a.
Clayton Act.
b.
Robinson-Patman Act.
c.
Sherman Antitrust Act.
d.
Federal Trade Commission Act.
e.
Interstate Commerce Act.
35. Campbell Soup agrees to sell its brand to a grocery chain only if the chain also agrees to buy a
minimum number of cases of its V-8 juice. This is an example of:
a.
a resale price maintenance agreement.
c.
exclusive dealing.
b.
a tying agreement.
d.
price discrimination.
36. For many years, AT&T required customers to rent telephones from AT&T in order to receive phone
service. This is an example of:
a.
price discrimination.
c.
an interlocking directorate.
b.
a tying contract.
d.
exclusive dealing.
37. If a firm acquires the stock of a competing firm that causes a substantial lessening of competition, it
would be in violation of the:
a.
Clayton Act.
b.
Robinson-Patman Act.
c.
Sherman Antitrust Act.
d.
Federal Trade Commission Act.
e.
Interstate Commerce Act.
38. Interlocking directorates are illegal under the ____ whether or not the effect may be to substantially
lessen competition.
a.
Clayton Act
b.
Robinson-Patman Act
c.
Sherman Antitrust Act
d.
Federal Trade Commission Act
e.
Interstate Commerce Act
39. Which antitrust act prohibits exclusive dealing, tying contracts, stock acquisitions, and interlocking
directorates?
a.
Sherman Antitrust Act of 1890.
b.
Clayton Act of 1914.
c.
Federal Trade Commission Act of 1914.
d.
Robinson-Patman Act of 1936.
e.
Cell-Kefauver Act of 1950.
40. Which of the following describes a tying contract?
a.
The seller of one product requires the buyer to purchase some other product(s).
b.
One firm buys the stock of a competing firm.
c.
The directors of one company serve on the board of directors of another company in the
same industry.
d.
An agreement between a manufacturer and a retailer based on the condition that the
retailer is not to carry any rival products of the manufacturer.
41. Which of the following was not illegal under the original Clayton Act?
a.
Tying contracts.
b.
Interlocking directorates.
c.
Merger by purchase of assets with cash.
d.
All of these were illegal under the original Clayton Act.
42. Under the Clayton Act, horizontal mergers by stock acquisition were:
a.
not considered.
b.
illegal if they could be show to lessen competition.
c.
illegal under any circumstances.
d.
legal if they could be shown to lessen competition.
43. A grocery store cannot sell Campbell Soup if it also sells other brands of soup. This is an example of:
a.
resale price maintenance.
c.
a tying agreement.
b.
territorial restrictions.
d.
exclusive dealing.
44. Under the Clayton Act, which of the following was illegal, even if it was not shown to lessen
competition substantially?
a.
Price discrimination.
b.
Tying contract.
c.
Horizontal mergers by stock acquisition.
d.
Interlocking directorates.
45. Which of the following is not one of the four anti-competitive activities outlined in the Clayton Act?
a.
Price discrimination.
b.
Exclusive buyer/seller contracts.
c.
Buying a competitor’s voting stock.
d.
Buying a competitor’s plants and equipment.
e.
Interlocking boards of directors.
46. The Clayton Act was passed in:
a.
1887.
b.
1890.
c.
1914.
d.
1936.
e.
1952.
47. The Clayton Act:
a.
was passed in 1890.
b.
created the Federal Trade Commission.
c.
abolished antitrust policy in this country.
d.
attempted to give explicit content to what formed an antitrust violation.
e.
made mergers between corporations illegal.
48. An exclusive contract:
a.
makes it illegal to price discriminate.
b.
requires a buyer to purchase all products from a specified supplier.
c.
requires a buyer not to purchase any requirements from the competitor of a specified
supplier.
d.
requires the buyer to purchase a second product as a condition of receiving the one he
wants.
e.
requires a seller to market its product within a limited geographic territory.
49. Under the Clayton Act,
a.
the same person cannot sit on the boards of directors of competing corporations.
b.
mergers are illegal.
c.
monopoly is illegal.
d.
the Sherman Antitrust Act was repealed.
50. The first piece of antitrust legislation in the United States to deal with price discrimination was the:
a.
Clayton Act.
b.
FTC Act.
c.
Celler-Kefauver Act.
d.
Robinson-Patman Act.
e.
Sherman Antitrust Act.
51. The antitrust legislation that made it illegal for a firm to buy a competitor’s voting stock was the:
a.
Sherman Antitrust Act.
b.
Celler-Kefauver Act.
c.
FTC Act.
d.
Robinson-Patman Act.
e.
Clayton Act.
52. Which two pieces of legislation were passed in 1914?
a.
Sherman Antitrust and Clayton Act
b.
Clayton Act and Robinson-Patman Act
c.
Robinson-Patman Act and Celler-Kefauver Act
d.
Clayton Act and Federal Trade Commission Act
e.
Sherman Antitrust Act and Federal Trade Commission Act.
53. A manufacturer will sell its product only to retailers who agree to buy its brand. This is an example of:
a.
price discrimination.
c.
a tying contract.
b.
exclusive dealing.
d.
interlocking directorates.
54. Ersatz Kreme will sell its filling to Hunky Donuts only if Hunky Donuts agrees not to buy filling from
other suppliers. This is an example of:
a.
price discrimination.
c.
a tying contract.
b.
exclusive dealing.
d.
interlocking directorates.
55. Which agency was created by Congress in 1914 to investigate and regulate unfair methods of
competition?
a.
Department of Justice.
c.
Interstate Commerce Commission.
b.
Federal Trade Commission.
d.
General Accounting Office.
56. The Federal Trade Commission Act was passed in:
a.
1890.
c.
1929.
b.
1914.
d.
1933.
57. Today, the Federal Trade Commission (FTC) is concerned with:
a.
enforcing consumer protection legislation.
b.
prohibiting deceptive advertising.
c.
preventing collusion.
d.
all of these.
58. The importance of the Federal Trade Commission Act of 1914 is that it:
a.
set up an independent antitrust agency with the power to bring court cases.
b.
strengthened the law against mergers.
c.
strengthened the law against price discrimination.
d.
all of these.
59. The Federal Trade Commission is charged with:
a.
supervising cartels in the United States.
b.
aiding small business in contract negotiations with foreign companies.
c.
investigating unfair and deceptive trade practices.
d.
approving contracts between businesses and government.
e.
bringing criminal complaints.
60. The Federal Trade Commission:
a.
was abolished by the Celler-Kefauver Act.
b.
was established when the Antitrust Division of the Justice Department was eliminated.
c.
largely deals with utility regulation.
d.
is a weak and ineffective government agency.
e.
investigates unfair and deceptive trade practices.
61. Which of the following is an amendment to the Clayton Act that strengthened it against price
discrimination?
a.
The Sherman Antitrust Act.
c.
The Robinson-Patman Act.
b.
The Federal Trade Commission Act.
d.
The Celler-Kefauver Act.
62. Which of the following antitrust laws broadened the list of illegal price discrimination practices and is
often called the “Chain Store Act“?
a.
The Clayton Act.
c.
The Robinson-Patman Act.
b.
The Federal Trade Commission Act.
d.
The Celler-Kefauver Act.
63. Which of the following is concerned primarily with price discrimination?
a.
The Sherman Antitrust Act.
c.
The Robinson-Patman Act.
b.
The Clayton Act.
d.
The Celler-Kefauver Act.
64. If a firm offers quantity discounts or special promotional allowances only to favored distributors and
the effect is to substantially lessen competition, then it is in violation of the:
a.
Clayton Act.
b.
Robinson-Patman Act.
c.
Sherman Antitrust Act.
d.
Federal Trade Commission Act.
e.
Celler-Kefauver Act.
65. Which of the following would be illegal under the Robinson-Patman Act?
a.
Ford and General Motors meet to fix the price of cars.
b.
Computer makers form a cartel.
c.
General Mills and Kelloggs decide to merge.
d.
Exxon sells gas at a higher wholesale price to independent gas retailers than to Exxon
retailers.
e.
Exxon Oil and Mobil Oil elect the same person to their boards of directors.
66. The Robinson-Patman Act is primarily concerned with:
a.
mergers.
b.
price fixing.
c.
price discrimination.
d.
monopoly.
e.
unfair and deceptive practices.
67. The antitrust legislation that was designed to help small stores survive competition with large retail
chains was the:
a.
FTC Act.
b.
Sherman Antitrust Act.
c.
Celler-Kefauver Act.
d.
Robinson-Patman Act.
e.
Clayton Act.
68. Price discounts to selected buyers with the intent of driving out smaller competitors is:
a.
widespread in all industries.
b.
common in the retailing industry only.
c.
illegal under the Robinson-Patman Act.
d.
allowed if the four-firm concentration ratio is less than 50 percent.
e.
beneficial to consumers in the long run.
69. The Robinson-Patman Act amended and further refined which of the following laws?
a.
The Sherman Antitrust Act.
b.
The Celler-Kefauver Act.
c.
The Clayton Act.
d.
The FTC Act.
e.
The Herfindahl-Hirschman Act.
70. The purchase of the assets of one steelmaker by another steelmaker might be a violation of the:
a.
Clayton Act.
c.
Celler-Kefauver Act.
b.
Federal Trade Commission Act.
d.
Robinson-Patman Act.
71. Which act of Congress extended the government’s authority to block horizontal and vertical mergers?
a.
Clayton Act.
c.
Celler-Kefauver Act.
b.
Sherman Antitrust Act.
d.
Robinson-Patman Act.
72. Which of the following U.S. antitrust laws prohibits mergers through the acquisition of a firm’s assets
if the merger would lessen competition?
a.
Clayton Act.
c.
Celler-Kefauver Act.
b.
Robinson-Patman Act.
d.
Sherman Antitrust Act.
73. Which of the following is often called the “Antimerger Act”?
a.
Clayton Act.
b.
Robinson-Patman Act.
c.
Sherman Antitrust Act.
d.
Federal Trade Commission Act.
e.
Celler-Kefauver Act.
74. If a firm engages in a merger that substantially reduces competition, then it would be in violation of
the:
a.
Clayton Act.
b.
Robinson-Patman Act.
c.
Sherman Antitrust Act.
d.
Federal Trade Commission Act.
e.
Celler-Kefauver Antimerger Act.
75. The Celler-Kefauver Act of 1950 amended the:
a.
Sherman Antitrust Act.
c.
Federal Trade Commission Act.
b.
Clayton Act.
d.
Robinson-Patman Act.
76. If Microsoft merges with retail stores and computer makers, such that competition is substantially
reduced, it would be in violation of the:
a.
Clayton Act.
b.
Robinson-Patman Act.
c.
Sherman Antitrust Act.
d.
Federal Trade Commission Act.
e.
Celler-Kefauver Act.
77. The Celler-Kefauver Act is primarily concerned with prohibiting:
a.
monopolization.
c.
predatory pricing.
b.
unfair business practices.
d.
anticompetitive mergers.
78. The Celler-Kefauver Act made it illegal to:
a.
provide selective discounts.
b.
set prices below marginal cost.
c.
conspire to collude.
d.
buy with cash a competitor’s patents, plants, or equipment.
e.
price discriminate.
79. The Celler-Kefauver Act strengthened the nation’s antitrust approach to merger enforcement by:
a.
making all mergers illegal.
b.
making all conglomerate mergers illegal.
c.
creating the Federal Trade Commission.
d.
providing HHI guidelines the government could use to clarify antitrust enforcement.
e.
amending the Clayton Act to include the purchase of assets with cash of another company
as a potential antitrust violation.
80. The Celler-Kefauver Act deals primarily with which of the following issues?
a.
Price discrimination.
b.
Exclusive dealing.
c.
Mergers.
d.
Deceptive advertising.
e.
Boards of directors.
81. The antitrust legislation that made it illegal for a firm to pay cash for a competitor’s patents, plant, and
equipment was the:
a.
Sherman Antitrust Act.
b.
Celler-Kefauver Act.
c.
Robinson-Patman Act.
d.
Clayton Act.
e.
FTC Act.
82. Which of the following is concerned primarily with mergers?
a.
The Sherman Antitrust Act.
c.
The Robinson-Patman Act.
b.
The Clayton Act.
d.
The Celler-Kefauver Act.
83. The Utah Pie case was brought under which of the following laws?
a.
The Sherman Antitrust Act.
c.
The Robinson-Patman Act.
b.
The Federal Trade Commission Act.
d.
The Celler-Kefauver Act.
84. In the Utah Pie case, the economic effect of the Supreme Court decision was to:
a.
prohibit the merger of two small pie companies.
b.
encourage competition by ruling that the national competitors had engaged in illegal price
discrimination.
c.
encourage competition by ruling that the national competitors had not engaged in illegal
price discrimination.
d.
discourage competition by national competitors in the Salt Lake City market.
85. The rule of reason refers to the interpretation of the courts that dominant firms should be broken up
because of their:
a.
market share dominance.
c.
monopolistic behavior.
b.
illegal business practices.
d.
All of these.
86. The rule of reason was applied in the:
a.
Standard Oil case.
c.
American Tobacco Trust case.
b.
U.S. Steel case.
d.
All of these.
87. Although U.S. Steel controlled nearly 75 percent of the domestic iron and steel industry, in 1920 the
Supreme Court ruled that the firm was not in violation of the Sherman Antitrust Act because there was
no evidence of abusive behavior. What antitrust doctrine was the court applying in this case?
a.
The rule of reason.
c.
The marginal cost pricing rule.
b.
The per se rule.
d.
The natural monopoly rule.
88. According to the rule of reason, when would the courts find a monopoly in violation of the Sherman
Antitrust Act?
a.
Always-monopoly is per se illegal under the rule of reason.
b.
Only when the monopoly created negative externalities.
c.
Only when the monopoly engaged in illegal business practices.
d.
Only when the monopoly charged excessively high prices.
89. The rule of reason was an antitrust law guideline that emphasized the importance of ____ over ____.
a.
price; quantity
b.
quantity; price
c.
law; the economy
d.
size; behavior
e.
behavior; size
90. Under a rule of reason approach, an act is illegal:
a.
only if it is shown to result in an anticompetitive outcome.
b.
if two parties merge.
c.
if a firm engages in price discrimination.
d.
if two firms engage in price fixing.
e.
if two firms undertake a joint venture
91. Under a rule of reason approach, which of the following would be legal in the United States?
a.
The merger of two small companies in an unconcentrated market.
b.
Price fixing between IBM and Compaq.
c.
The merger between Ford and General Motors.
d.
Kellogg’s and General Mills collude to drive Quaker Oats out of the business.
e.
Exxon Oil and Mobil Oil elect the same person to their boards of directors.
92. During this century, court decisions on antitrust have:
a.
changed from per se, to rule of reason, and back to per se.
b.
changed from rule of reason, to per se, and back to rule of reason.
c.
always emphasized per se.
d.
always emphasized rule of reason.
e.
varied from judge to judge without following any pattern.
93. The landmark antitrust case which established that size alone is not sufficient to prove an antitrust
violation is the:
a.
U.S. Steel case.
b.
Brown Shoe case.
c.
Von’s Grocery case.
d.
ALCOA case.
e.
Pabst Brewing case.
94. The landmark antitrust case which established that size alone can be an antitrust violation is the:
a.
U.S. Steel case.
b.
Brown Shoe case.
c.
Von’s Grocery case.
d.
ALCOA case.
e.
Pabst Brewing case.
95. In the 1945 Alcoa antitrust case, the Court found ALCOA:
a.
not guilty of violating the Sherman Antitrust Act because it was a good monopoly.
b.
did not have a good reason for having a large market share, so found it guilty.
c.
guilty because its firm size was a per se violation of antitrust laws.
d.
not guilty because it did not engage in any illegal or unfair acts.
e.
was no threat to industrial democracy.
96. In which antitrust case did the Supreme Court begin to apply the per se rule to determine whether a
firm was in violation of the Sherman Antitrust Act?
a.
The Standard Oil case.
c.
The IBM case.
b.
The Alcoa case.
d.
The MIT case.
97. The per se rule refers to the interpretation of the courts that dominant firms should be broken up
because of their:
a.
market share of dominance.
c.
price discrimination practices.
b.
history of illegal business practices.
d.
All of these.
98. The per se rule was introduced in the:
a.
Standard Oil case.
c.
American Tobacco Trust case.
b.
U.S. Steel case.
d.
Alcoa case.
99. The per se rule was an antitrust law guideline that emphasized ____ over ____.
a.
price; quantity
b.
quantity; price
c.
law; the economy
d.
size; behavior
e.
behavior; size
100. Under a per se approach to the antitrust laws,
a.
the government must prove some anticompetitive outcome from the act.
b.
large size alone can be an antitrust violation.
c.
the action will pass antitrust scrutiny if it is shown to be reasonable.
d.
the only real question is whether the prices charged are reasonable.
e.
the courts have ruled antitrust laws unconstitutional
101. When the court determines that a firm’s size alone is sufficient to find that it violated antitrust laws,
this criterion is called:
a.
countervailing power.
b.
economies of scale.
c.
per se.
d.
rule of reason.
e.
natural monopoly.
102. The government’s court case against Microsoft is an example of:
a.
predatory pricing.
c.
economic regulation.
b.
antitrust enforcement.
d.
the regulatory dilemma.
103. A merger between firms that compete in the same market is called a:
a.
horizontal merger.
c.
conglomerate merger.
b.
vertical merger.
d.
monopoly.