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72. Manufacturers who refuse to deal with retailers who do not charge a suggested retail price have committed a per
se violation of the antitrust laws.
a. True
b. False
73. Manufacturers who refuse to deal with discount houses have committed a per se violation of the antitrust laws.
a. True
b. False
74. Which of the following is not required for an enforceable covenant not to compete?
a. sale of a business
b. reasonable geographic scope
c. reasonable time limits
d. All of the above are required.
75. Which act contains prohibitions on monopolization?
a. Sherman Act
b. Clayton Act
c. Robinson-Patman Act
d. Celler-Kefauver Act
e. none of the above
76. Which of the following acts prohibits unfair methods of competition?
a. Sherman Act
b. Federal Trade Commission Act
c. Robinson-Patman Act
d. Clayton Act
e. none of the above
77. Which of the following is not regulated by the Clayton Act?
a. interlocking directorates
b. mergers
c. tying sales
d. monopolization
e. All of the above are regulated by the Clayton Act.
78. The Celler-Kefauver Act:
a. is an amendment to the Clayton Act.
b. regulates mergers.
c. is the Antitrust Improvements Act.
d. none of the above
79. Gringo's Restaurant is a small restaurant located in a Mesa, Arizona, neighborhood shopping center that has a
grocery store (chain) as its anchor tenant. Carl Williams owns Gringo's and has just negotiated its sale to Wilma
Freestone. The covenant not to compete provides that Williams will not open a competing restaurant anywhere
within a two-mile radius of Gringo's for a period of two years. The noncompete covenant is:
a. too restrictive and is a violation of the Sherman Act.
b. not subject to review so long as it is part of the sales contract.
c. probably reasonable and enforceable.
d. void
80. In Weyerhaeuser v. Ross-Simmons, Weyerhaeuser was found liable for:
a. predatory bidding.
b. predatory pricing.
c. nothing.
d. monopsony violations.
81. Treble damages are recoverable for actions brought under:
a. the Sherman Act.
b. the FTC Act.
c. the Antitrust Improvements Act.
d. all of the above
82. Superior skill, foresight, and industry is a:
a. justification for a monopoly.
b. defense to a vertical restraint.
c. defense to predatory pricing.
d. all of the above
83. Cross-elasticity of demand is:
a. the willingness to substitute other products.
b. a factor in determining resale price maintenance.
c. a factor in determining the geographic market.
d. all of the above
84. Market power is:
a. represented by a relatively inelastic demand curve.
b. defined by statute.
c. the same as market share above 50 percent.
d. all of the above
85. Which of the following is not a per se violation of the antitrust laws?
a. price fixing.
b. group boycotts.
c. predatory pricing.
d. division of markets.
e. All of the above are per se violations.
86. The Noerr-Pennington doctrine:
a. is an exception to price fixing.
b. is based on First Amendment rights.
c. does not provide protection even when the action is a sham for anticompetitive behavior.
d. all of the above
87. Horizontal mergers:
a. include mergers between manufacturers and jobbers.
b. can be approved if a failing company is acquired.
c. are always antitrust violations.
d. none of the above
88. Which of the following would not be price fixing?
a. agreements to limit production
b. agreements to limit competitive bidding
c. agreements to charge the same interest on credit contracts
d. All of the above are price fixing.
89. Jay Farnswood is the president of a local group of real estate agents. At their monthly luncheon meeting,
Farnswood stood and told his colleagues that he simply could not survive by charging the 5 percent commission rate
and noted, "I don't know what the rest of you are going to do, but I am going to charge 6 percent commission on all
my listings starting today." Farnswood's statements:
a. constitute price fixing.
b. only reflect his intentions; there is no agreement to fix prices.
c. constitute an attempt to monopolize.
d. none of the above
90. Several law firms in the Detroit area have met and agreed not to charge more than $200 for a simple will so that
they can more effectively compete with the increasing number of legal clinics. The agreement for a price maximum
is:
a. not an antitrust violation because the public benefits from maximum prices.
b. not an antitrust violation because it is a service and not a sale of goods.
c. price fixing and an antitrust violation.
d. none of the above
91. Which of the following activities is not covered in the Sherman Act?
a. attempts to monopolize
b. price fixing
c. boycotts
d. price discrimination
92. The manufacturers of several designer purses have met and agreed not to sell their purses to Jolie's Department
Store because of Jolie's practice of discounting all items 20 percent below the retail costs at other stores. The
manufacturers are concerned about maintaining their images of exclusivity and quality. The agreement among the
manufacturers:
a. is valid because of their need to protect their product.
b. violates the Sherman Act because it is a boycott.
c. is valid because the rule of reason applies and they have a valid reason.
d. none of the above
93. Pool Line is the manufacturer of a pool cleaning system that has been called by the pool construction industry, "the
miracle we have waited a lifetime for." The cleaning system is very effective and recommended by all consumer
magazines. The result is that 93 percent of all new pools have the system, and 94 percent of all pool owners buying
replacement systems choose Pool Line. Pool Line's competitors have brought suit charging Pool Line with
monopolization of the pool cleaning market. Pool Line:
a. probably has a monopoly per se because of the 90 percent+ market share figures.
b. probably has a valid defense of superior skill, foresight, and industry.
c. will owe treble damages to the competitors.
d. none of the above
94. Pool Line is the manufacturer of a pool cleaning system that has been called by the pool construction industry, "the
miracle we have waited a lifetime for." The cleaning system is very effective and recommended by all consumer
magazines. The result is that 93 percent of all new pools have the system, and 94 percent of all pool owners buying
replacement systems choose Pool Line. The relevant product market is:
a. pool cleaning systems.
b. pool supplies and equipment.
c. cleaning equipment.
d. none of the above.
95. A group of local architects has met and decided that their bidding on public works projects has created a danger for
the public because the bids come in so dangerously low that building safety is sacrificed. The action of the
architects:
a. does not violate the Sherman Act because of the reason for their boycott.
b. does not violate the Sherman Act because they offer services only and do not sell goods.
c. violates the Sherman Act in spite of their motivation.
d. none of the above
96. Nike and Reebok, both leading manufacturers of athletic shoes, have proposed a joint venture to manufacture
special orthopedic devices for handicapped children. The joint venture is:
a. a horizontal merger and violates the Sherman Act.
b. subject to a rule of reason review.
c. a per se violation of the Sherman Act.
d. none of the above
97. Exhaust, Inc. has the exclusive contract with the state of California for building, maintaining, and operating the
state's vehicle emission testing centers. Auto Emissions, Inc. has announced it will submit a bid on the upcoming
renewal. Exhaust, Inc. has begun lobbying state legislators to pass a bill allowing only in-state firms to be awarded
the exclusive emissions contract. Exhaust is a California corporation and Auto Emissions is a New York
corporation. Exhaust's conduct is:
a. an intentional act designed to create a monopoly and violates the Sherman Act.
b. a boycott and a violation of the Sherman Act.
c. an attempt at price fixing and a violation of the Sherman Act.
d. protected under the Noerr-Pennington doctrine.
98. The Joint Venture Trading Act of 1983:
a. allows Justice Department approval for joint ventures of competitors in the international markets.
b. prohibits joint ventures among competitors unless in the international market.
c. prohibits joint ventures among competitors.
d. none of the above
99. Carl Wilton has just sold his Mexican restaurant to Jerry Felt. The restaurant is located in Costa Brava, a city of
about 300,000 people. In their sales agreement, a clause provides that Carl will not open another restaurant in Costa
Brava for a period of five years. The clause is:
a. a covenant not to compete.
b. void as against public policy.
c. prohibited under the Sherman Act.
d. none of the above
100. Which of the following statutes was the first federal antitrust statute?
a. Clayton Act
b. Sherman Act
c. Federal Trade Commission Act
d. none of the above
101. What is the maximum penalty a corporation can receive for a violation of the Sherman Act?
a. $350,000
b. three years' imprisonment
c. $10 million
d. both a and b
102. Resale price maintenance is:
a. a per se violation.
b. an attempt by a retailer to control prices.
c. regulated by the Clayton Act.
d. all of the above
103. Resale price maintenance occurs when:
a. the manufacturer suggests retail price.
b. minimum prices are enforced.
c. consignment arrangements control prices.
d. all of the above
104. Fair trade contracts are:
a. valid.
b. permitted under state laws.
c. an issue related to resale price maintenance.
d. none of the above
105. Exclusive distributorships are:
a. covered under the Robinson-Patman Act.
b. illegal per se.
c. questioned when there is no interbrand competition.
d. all of the above
106. Territorial restrictions are:
a. illegal per se.
b. questioned when there is no interbrand competition.
c. the same as tying sales.
d. none of the above
107. Snow-Man manufactures a cotton candy machine. It will not sell its machine unless the buyer purchases at least
five-dozen paper cones for holding the cotton candy. Snow-Man's requirement:
a. is an example of an exclusive dealing contract.
b. is a tying arrangement.
c. is a requirements contract.
d. none of the above
108. Snow-Man manufactures a cotton candy machine. It will not sell its machine unless the buyer purchases at least
five-dozen paper cones for holding the cotton candy. The cotton candy machine is:
a. the tying product.
b. the tied product.
c. neither of the above - it is not a tying arrangement
d. none of the above
109. Predatory pricing is:
a. pricing below cost.
b. per se illegal.
c. price discrimination.
d. none of the above
110. Vertical mergers are:
a. illegal per se.
b. mergers between manufacturers and wholesalers.
c. regulated by the Sherman Act.
d. all of the above
111. Which of the following is not an antitrust violation so long as there is sufficient interbrand competition?
a. resale price maintenance
b. sole outlets and exclusive distributorships
c. price discrimination
d. all of the above
112. Suggested retail prices sent to retailers by the manufacturer constitute:
a. resale price maintenance.
b. price fixing.
c. a violation of the antitrust laws if the suggested prices are enforced.
d. none of the above
113. Maximum price requirements:
a. do not constitute antitrust violations because of the benefits to consumers.
b. only affect the amount sold and not the competition; and there is no antitrust violation.
c. constitute resale price maintenance.
d. none of the above
114. Fair trade contracts:
a. can no longer be allowed by the states.
b. are contracts that prohibit exclusive distributorships.
c. are permissible between manufacturers and retailers.
d. none of the above
115. Which of the following arrangements is subject to the rule of reason test?
a. sole outlets and exclusive distributorships
b. resale price maintenance
c. tying
d. All of the above are under the rule of reason test.
116. Phillip Esten operates a mail store in which he offers various services such as packaging items for shipment,
delivering items to overnight services, and a fax machine. Esten has been charging $2.00 per page for the fax
service, but a new store has opened in a nearby shopping center that is charging $1.00 per page. Esten lowers his
price to $.50 per page, knowing this charge will not always cover his cost. Esten's actions:
a. constitute predatory pricing and are a violation of the Robinson-Patman Act.
b. constitute meeting the competition.
c. constitute resale price maintenance violations.
d. none of the above
117. Phillip Esten operates a mail store in which he offers various services such as packaging items for shipment,
delivering items to overnight services, and a fax machine. Esten charges $4.00 for deliveries for one-time
customers and $2.00 for deliveries for his account customers. Esten's prices:
a. are a violation of the Robinson-Patman Act.
b. are not covered under the Robinson-Patman Act.
c. constitute price discrimination.
d. none of the above
118. Which of the following is not an exemption to the Robinson-Patman Act?
a. sales to nonprofit institutions
b. sales to local governments
c. sales to the federal government
d. All of the above are exemptions.
119. Vertical mergers are:
a. mergers between competitors.
b. mergers between buyers and sellers.
c. per se violations of antitrust laws.
d. none of the above
120. Fair trade contracts:
a. were eliminated in 1975.
b. have been permitted in nearly one-half of the states.
c. relate to issues surrounding price discrimination.
d. none of the above
