28) Two government organizations that are responsible for initiating actions against possible
antitrust cases are
A) the Department of Justice and the Department of Commerce.
B) the Department of Commerce and the Federal Reserve.
C) the Department of Justice and the Federal Trade Commission.
D) the Department of Labor and the Department of Commerce.
29) The first antitrust legislation was the
A) Sherman Act.
B) Clayton Act.
C) Federal Trade Commission Act.
D) Robinson-Patman Act.
30) The Sherman Act of 1890
A) made it illegal to engage in practices that resulted in restraint of trade.
B) outlawed tying contracts.
C) outlawed stock-purchase mergers that would substantially reduce competition.
D) prohibited selling products at “unreasonably low prices” with the intent of reducing
competition.
31) The Sherman Act of 1890
A) prohibited selling products at “unreasonably low prices” with the intent of reducing
competition.
B) outlawed tying contracts.
C) outlawed stock-purchase mergers that would substantially reduce competition.
D) made it illegal to monopolize a market.
32) The Act which made it illegal to monopolize a market was the
A) Sherman Act.
B) Clayton Act.
C) Robinson-Patman Act.
D) Celler-Kefauver Act.
33) The Act which made it illegal to engage in practices that resulted in the restraint of trade was
the
A) Sherman Act.
B) Clayton Act.
C) Robinson-Patman Act.
D) Celler-Kefauver Act.
34) The Act which outlawed tying contracts was the
A) Sherman Act.
B) Clayton Act.
C) Robinson-Patman Act.
D) Celler-Kefauver Act.
35) The Act which outlawed price discrimination for the purpose of reducing competition was
the
A) Sherman Act.
B) Clayton Act.
C) Robinson-Patman Act.
D) Celler-Kefauver Act.
36) The Act which outlawed stock-purchase mergers that would substantially reduce competition
was the
A) Sherman Act.
B) Clayton Act.
C) Robinson-Patman Act.
D) Celler-Kefauver Act.
37) The Act which prohibited selling products at unreasonably low prices was the
A) Sherman Act.
B) Clayton Act.
C) Robinson-Patman Act.
D) Celler-Kefauver Act.
38) The Act which outlawed asset-purchase mergers that would substantially reduce competition
was the
A) Sherman Act.
B) Clayton Act.
C) Robinson-Patman Act.
D) Celler-Kefauver Act.
39) The Act that extended antitrust legislation to proprietorships and partnerships was the
A) Sherman Act.
B) Hart-Scott-Rodino Act.
C) Robinson-Patman Act.
D) Celler-Kefauver Act.
40) The Clayton Act of 1914
A) prohibited selling products at “unreasonably low prices” with the intent of reducing
competition.
B) outlawed tying contracts.
C) outlawed asset-purchase contracts that would substantially reduce competition.
D) made it illegal to monopolize a market.
41) The Clayton Act of 1914
A) prohibited selling products at “unreasonably low prices” with the intent of reducing
competition.
B) made it illegal to monopolize a market.
C) repealed the Sherman Act.
D) outlawed price discrimination for the purpose of reducing competition.
42) The Federal Trade Commission Act
A) prohibited selling products at “unreasonably low prices” with the intent of reducing
competition.
B) was passed to establish a body to enforce antitrust laws.
C) outlawed stock purchases that would substantially reduce competition.
D) made it illegal to monopolize a market.
43) The Robinson-Patman Act of 1936
A) prohibited selling products at “unreasonably low prices” with the intent of reducing
competition.
B) made it illegal to monopolize a market.
C) repealed the Sherman Act.
D) outlawed price discrimination for the purpose of reducing competition.
44) The Celler-Kefauver Act of 1950
A) extended antitrust legislation to proprietorships and partnerships.
B) made it illegal to monopolize a market.
C) outlawed asset-purchase mergers that would substantially reduce competition.
D) outlawed price discrimination for the purpose of reducing competition.
45) The Hart-Scott-Rodino Act of 1980
A) extended antitrust legislation to proprietorships and partnerships.
B) made it legal to monopolize a market.
C) outlawed asset-purchase mergers that would substantially reduce competition.
D) outlawed price discrimination for the purpose of reducing competition.
46) Tie-in sales
A) are legal under the Clayton Act.
B) are the same as predatory pricing.
C) were banned under the Hart-Scott-Rodino Act.
D) are contracts that prevent purchasing one good without purchasing another.
47) The Celler-Kefauver Act of 1950
A) established the FTC.
B) closed down a loophole in the Clayton Act by outlawing mergers through the purchase of
another firm’s physical assets.
C) closed down a loophole in the Sherman Act by outlawing mergers through the purchase of
another firm’s physical assets.
D) banned tying contracts.
Recall the Application about the 1998 merger between Penzoil and Quaker State to answer
the following question(s). The merger resulted in a company with a market share of 38%:
29% from Penzoil and 9% from Quaker State.
48) Recall the Application. A recent study concluded that following the merger between Penzoil
and Quaker State, the new company ________ the price of Penzoil products and ________ the
price of Quaker State products.
A) increased; increased
B) decreased; increased
C) increased; did not change
D) did not change; increased
49) Recall the Application. A recent study concluded that following the merger between Penzoil
and Quaker State, the market share of Penzoil products ________ and the market share of
Quaker State products ________.
A) increased; increased
B) increased; decreased
C) increased; did not change
D) did not change; increased
50) The purpose of antitrust policy is to encourage competition in an industry.
51) Producers of close substitutes have little or no incentive to merge.
52) The Justice Department will not allow firms to merge if the result will be higher prices to
consumers.
53) A merger may cause movement upward along the demand curve.
54) Mergers can sometimes be good for a market by allowing firms to take advantage of
economies of scale.
55) Analysis of a proposed merger involves examining its effect only on a market’s
concentration.
56) The government weighs the potential cost savings resulting from a merger against the
potential anticompetitive problems to determine whether or not to allow a merger to take place.
57) The merger of two firms selling close substitutes may lead to higher prices.
58) It is possible for a merger to result in lower prices for consumers.
59) The government may intervene when a specific business practice increases concentration in
an already concentrated market.
60) The government allowed the merger between Interstate Bakeries and Continental Bakery.
61) A tie-in sale is when two firms merge together and are essentially tied together.
62) The Clayton Act outlawed tying contracts.
63) Prior to the Hart-Scott-Rodino Act, antitrust laws did not apply to proprietorships.
64) The Sherman Act outlawed practices that result in the restraint of trade.
65) The Robinson-Patman Act outlawed predatory pricing.
66) The Celler-Kefauver Act outlawed predatory pricing.
67) The government can break up monopolies under federal antitrust legislation.
68) Discuss three types of antitrust policy.
69) Explain the new guidelines used by the Department of Justice and the Federal Trade
Commission for evaluating proposed mergers.
70) Explain the key issues presented by both sides of the Staples/Office Depot case in 1997.
71) Explain what is meant by predatory pricing, and the inherent difficulties involved with
predatory pricing from a firm’s point of view.
72) What are the main features of the Sherman Act?
73) What are the main features of the Clayton Act?
74) What are the main features of the Robinson-Patman Act?
75) What are the main features of the Celler-Kefauver Act?
76) What are the main features of the Hart-Scott-Rodino Act?
77) When was the Clayton Act passed, and what were the main practices that it outlawed?
78) Explain why it was necessary to pass the Clayton Act when the Sherman Act had already
addressed the antitrust issue.