60) Antitrust laws in the United States
A) are an attempt to foster competition.
B) are not necessary in the twenty-first century.
C) have not been used in the past twenty-five years.
D) are the same as the laws in the European Union.
61) The Supreme Court has defined the offense of monopolization as involving all of the
following elements EXCEPT
A) the possession of monopoly power in the relevant market.
B) the willful acquisition of monopoly power.
C) the ability to grow a business as a consequence of a superior product.
D) the maintenance of monopoly power.
62) Which of the following defines monopoly?
A) Sherman Act
B) Clayton Act
C) Federal Trade Commission Act
D) none of the above
63) Which of the following defines monopolization?
A) the Securities and Exchange Commission
B) the Federal Reserve
C) U.S. Supreme Court
D) Federal Trade Commission Act
64) The act of selling an item in slightly altered forms at different prices and to different groups
of consumers is known as
A) bundling.
B) versioning.
C) tie-in sales.
D) lemons marketing.
65) The act of offering two or more products for sale as a set is called
A) bundling.
B) versioning.
C) tie-in sales.
D) branding.
66) According to the Justice Department and the Federal Trade Commission, a merger would
likely be challenged if
A) the post-merger industry has an HHI above 1,500 and the HHI rises by more than 100.
B) the post-merger industry has an HHI above 500 and the HHI rises by more than 50.
C) the number of firms in the post-merger industry is very large.
D) the firms’ markets are very large.
67) According to U.S. antitrust enforcement guidelines, a merger is likely to be challenged if
A) the HHI decreases after the merger.
B) the industry after the merger has an HHI above 1,800 and the HHI rises by more than 100.
C) the industry after the merger has an HHI above 1,800 and the HHI falls by more than 100.
D) the industry after the merger has an HHI above 1,000 and the HHI rises by more than 10.
68) The U.S. antitrust enforcers determine whether a merger violates antitrust laws by examining
A) both the resulting change in the HHI and the level of post-merger HHI.
B) only the resulting change in the HHI but not the level of HHI after the merger.
C) both the size of the market after the merger and the profits of the mergers.
D) whether the mergers are monopolies before they merge.
69) Defining the “relevant market” involves looking at two components. They are
A) the competitive market and the dominant market.
B) the local market and the national market.
C) the geographic market and the product market.
D) the goods market and the services market.
70) The Sudsy Soda Company will not sell its soft drinks to a restaurant unless that business also
buys paper cups from Sudsy. This requirement is an example of
A) product versioning.
B) tie-in sales.
C) price differentiation.
D) complementary pricing.
71) One of the elements of monopolization is
A) having a monopoly.
B) wanting to be a monopoly and wanting to earn monopoly profits.
C) monopoly pricing.
D) the willful acquisition of monopoly power.
72) One of the elements of monopolization is
A) having a superior product or having a superior business acumen..
B) the possession of monopoly power in the relevant market.
C) when only one firm exists in an industry.
D) having a significant pricing power due to an accident in the relevant market.
73) The possession of monopoly power and the willful acquisition of that power is
A) defined in the Sherman Antitrust Act as monopolization.
B) defined by the Supreme Court as monopolization.
C) not defined as monopolization until a statement about profits is included.
D) not the definition of monopolization.
74) The Supreme Court has defined the offense of monopolization to
A) be when only one firm exists in an industry.
B) occur when asymmetric information exists.
C) include the possession of monopoly power and the willful maintenance of that power.
D) be unfair acts in the practice of commerce.
75) Suppose that in an industry, firm X has 50 percent market share, firm Y has 35 percent
market share, and firm Z has 10 percent market share. Which of the following mergers is NOT
likely to be challenged by the Federal Trade Commission?
A) a merger between firms X and Y
B) a merger between firms Y and Z
C) a merger between firms X and Z
D) Any merger of two firms among those firms is likely to be challenged.
76) The type of mergers that the Federal Trade Commission will most likely challenge are
A) mergers of firms within a relevant market.
B) mergers of firms in different markets.
C) mergers of firms that will generate economies of scale.
D) mergers of firms in different geographical locations.
77) In the United States, antitrust enforcement focuses on
A) the profitability of the leading firms in an industry.
B) the degree of market concentration within a market.
C) the average level of prices charged by firms.
D) the price-cost margin of an industry.
78) The key issue in determining the relevant product market is
A) the degree of interchangeability between products.
B) the specific geographic area in which competing products overlap.
C) the production processes used to produce the goods.
D) the market share test.
79) Offering two or more products for sale as a set is known as
A) bundling.
B) versioning.
C) monopolizing.
D) product sharing.
80) The United States as a whole would be inappropriate as the relevant geographic market when
an antitrust case involved
A) ABC and NBC.
B) two auto producers.
C) two steel producers.
D) two concrete producers.
81) If bottled water, soft drinks and juices are included in the definition of the beverage market,
then the relevant definition of the market is defined by
A) the locations of products that are produced.
B) the low degrees of substitution between products in the market.
C) the high degrees of substitution between products in the market.
D) a low level of competition among firms producing those products.
82) The main goal of antitrust policy is to
A) encourage firms to produce at the MR = demand level.
B) regulate natural monopolies.
C) prevent the monopolization of industries.
D) prevent the nationalization of industries.
83) The first step in enforcing any antitrust policy is to
A) win the support of the public.
B) win congressional approval.
C) win the approval of the state senators from the state where the company is headquartered.
D) define the market.
84) Elmo’s gas station in El Paso only sells gasoline if customers also purchase its car wash
service.
A) This is called a tie-in sale and is in violation of antitrust laws.
B) This is not in violation of antitrust laws, as cars need both gasoline and car wash.
C) This is not in violation of antitrust laws, as consumers get the gasoline below market prices.
D) This is in violation of the Robinson-Patman Act.
85) When companies sell slightly different forms of a product to different groups of customers,
this is known as
A) market testing.
B) editions.
C) adaptations.
D) versioning.
86) The U.S. antitrust enforcers will likely block a merger if
A) the merging firms already earn excessive profits.
B) the merging firms are in different markets.
C) the merger will substantially increase market power.
D) the degree of concentration declines as a result of the merger.
87) Which of the following mergers would most likely be challenged by the Federal Trade
Commission?
A) two restaurants in a large metro area
B) two largest wireless service providers in the U.S. wireless communication industry
C) an automaker and an insurance company
D) one oil refinery in the U.S. and another oil refinery in Canada
88) One of the agencies responsible for enforcement of antitrust policy is
A) the Trust Division of Congress.
B) the Federal Trade Commission.
C) the World Trade Organization.
D) the Food and Drug Administration.
89) Enforcement of antitrust policy is the responsibility of
A) the Trust Division of Congress and the World Trade Organization.
B) the Federal Trade Commission and the Antitrust Division of the Department of Justice.
C) the World Trade Organization and the FDA.
D) the Food and Drug Administration and Congress.
90) A measure of monopoly power used by the government is the
A) percentage share of the relevant market or market share test.
B) profit of the firm compared to other firms in the industry.
C) price charged by the firm for goods and services.
D) percentage difference between price and marginal cost.
91) When Microsoft put together a set of products with the Windows operating system, it was
practicing
A) bundling.
B) tie-in sales.
C) versioning.
D) compacting.
92) When Apple put together a set of mobile apps with its iPhone, it was practicing
A) a loss leader.
B) tie-in sales.
C) bundling.
D) compacting.
93) Discuss the Clayton Act and the Federal Trade Commission Act, and relevant amendments
to them.
94) Discuss the important provisions of the Sherman Antitrust Act of 1890.
95) What is the difference between product versioning and product bundling? Which of these
two business practices have antitrust authorities been more likely to regard to be the form of
price discrimination called tie-in sales? Why?
96) What is the difference between holding a monopoly and monopolization? Which is illegal?
Explain.