Business Its Legal, Ethical, and Global Environment: Chapter 16. All Answers

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1. Covenants not to compete are illegal per se. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competiti... on? Covenants Not to Compete : Bloom's: Knowledge 2. Covenants not to compete cannot be used in agreements for the sale of businesses. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? Covenants Not to Compete : Bloom's: Knowledge 3. Section 1 of the Sherman Act covers monopolization. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 4. The Sherman Act does not apply unless sales across state lines are involved. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 5. The Clayton Act provides for treble damage recovery for all antitrust violations. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What are the Penalties and Remedies for Anticompetitive Behavior? : Bloom's: Knowledge 6. The Sherman Act imposes fines and imprisonment for violations. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What are the Penalties and Remedies for Anticompetitive Behavior? : Bloom's: Knowledge 7. Competition restraints in commercial leases are generally valid. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? Covenants Not to Compete : Bloom's: Knowledge 8. The Robinson-Patman Act deals with price discrimination. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Discrimination : Bloom's: Knowledge 9. The Celler-Kefauver Act regulates asset acquisitions. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? An Overview of the Federal Statutory Scheme on Restraint of Trade : Bloom's: Knowledge 10. The Antitrust Improvements Act gave the Justice Department broader investigative authority. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? An Overview of the Federal Statutory Scheme on Restraint of Trade : Bloom's: Knowledge 11. The interstate commerce jurisdictional standard for the Sherman Act requires proof of transactions across state lines. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? An Overview of the Federal Statutory Scheme on Restraint of Trade : Bloom's: Knowledge 12. The Clayton Act does not carry criminal penalties. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What are the Penalties and Remedies for Anticompetitive Behavior? : Bloom's: Knowledge 13. Equitable remedies are not available under the Sherman Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What are the Penalties and Remedies for Anticompetitive Behavior? : Bloom's: Knowledge 14. Only Clayton Act violations carry treble damages. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What are the Penalties and Remedies for Anticompetitive Behavior? : Bloom's: Knowledge 15. Generally, joint ventures among competitors in international business are per se violations of the Sherman Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Antitrust Issues in International Competition : Bloom's: Knowledge 16. Monopoly power is the power to control prices or exclude competition. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 17. Cross-elasticity of demand is irrelevant in determining the product market. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 18. Predatory pricing is pricing below actual cost. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 19. Predatory pricing below cost with monopoly power is illegal. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 20. Setting minimum prices is a per se violation of the Sherman Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 21. An agreement among competitors for elimination of bidding is a violation of federal antitrust laws. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Fixing : Bloom's: Knowledge 22. Setting maximum prices is a per se violation of the Sherman Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Fixing : Bloom's: Knowledge 23. Limitations on bidding are permitted in professional bids such as in architecture and service contracts. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Fixing : Bloom's: Knowledge 24. Division of markets is a per se violation. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Divvying up the Markets : Bloom's: Knowledge 25. Group boycotts are per se violations. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Group Boycotts and Refusals to Deal : Bloom's: Knowledge 26. Joint ventures among competitors are per se violations. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Antitrust Issues in International Competition : Bloom's: Knowledge 27. The Noerr-Pennington doctrine is an antitrust exception that originates in the First Amendment. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Free Speech and Anticompetitive Behavior : Bloom's: Knowledge 28. The failing company doctrine is an exception to horizontal merger restrictions. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Merging Competitors and the Effect on Competition : Bloom's: Knowledge 29. The Celler-Kefauver Act is part of the Clayton Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? An Overview of the Federal Statutory Scheme on Restraint of Trade : Bloom's: Knowledge 30. Private parties can bring suit under the Federal Trade Commission Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What are the Penalties and Remedies for Anticompetitive Behavior? : Bloom's: Knowledge 31. Monopolization is a vertical restraint of trade. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 32. Resale price maintenance is a vertical restraint of trade. a. b. : 1 Easy : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 33. Resale price maintenance is a per se violation of the Sherman Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 34. Conscious parallelism negates market forces. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 35. Price control consignments are treated as forms of resale price maintenance. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 36. Fair trade laws are still in effect in many states. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 37. Exclusive distributorships are per se antitrust violations. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Sole Outlets and Exclusive Distributorships : Bloom's: Knowledge 38. Customer and territorial restrictions are per se antitrust violations. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Customer and Territorial Restrictions : Bloom's: Knowledge 39. Tying arrangements are per se antitrust violations. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Tying Arrangements : Bloom's: Knowledge 40. The tying product is the desired product. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Tying Arrangements : Bloom's: Knowledge 41. A defense to tying is quality control. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Tying Arrangements : Bloom's: Knowledge 42. Sole outlets are not antitrust violations when there is interbrand competition. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Sole Outlets and Exclusive Distributorships : Bloom's: Knowledge 43. Exclusive dealing contracts are per se violations. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Sole Outlets and Exclusive Distributorships : Bloom's: Knowledge 44. Generic brands can carry a lesser price than brand-name products even though identical in composition without experiencing price discrimination difficulties. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Discrimination : Bloom's: Knowledge 45. Meeting the competition is a defense to price discrimination. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Discrimination : Bloom's: Knowledge 46. The legality of vertical mergers is determined by the relevant geographic and product markets. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Vertical Mergers : Bloom's: Knowledge 47. A vertical merger that prevents market entry is illegal. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Vertical Mergers : Bloom's: Knowledge 48. There is no price discrimination when lower prices are charged for generic label cans of the same product. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Discrimination : Bloom's: Knowledge 49. A tying arrangement requires the seller to have market power in the tying product. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Tying Arrangements : Bloom's: Knowledge 50. A tying arrangement requires the seller to have market power in the tied product. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Tying Arrangements : Bloom's: Knowledge 51. A covenant in the sale of a dry cleaning business that prohibits the seller from operating a dry cleaning business anywhere in that state is too restrictive to be enforced. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? Covenants Not to Compete : Bloom's: Knowledge 52. Requiring a franchisee to use trademark napkins is a per se antitrust violation. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Tying Arrangements : Bloom's: Knowledge 53. An agreement among competitors to control the supply of their products to the market violates the Sherman Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Fixing : Bloom's: Knowledge 54. A covenant not to compete in a contract for the sale of a business protects the goodwill of the existing business for the buyer. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? Covenants Not to Compete : Bloom's: Knowledge 55. Corporate officers are not liable for violations of the Sherman Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What are the Penalties and Remedies for Anticompetitive Behavior? : Bloom's: Knowledge 56. Refusals to deal are a per se violation of the Sherman Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Group Boycotts and Refusals to Deal : Bloom's: Knowledge 57. A boycott against subcontractors who are cheaper because of safety concerns is still an illegal group boycott. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Group Boycotts and Refusals to Deal : Bloom's: Knowledge 58. Interlocking directorates tend to be efficient, effective, ethical, and legal. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Subtle Anticompetitive Behavior: Interlocking Directorates : Bloom's: Knowledge 59. Meeting the competition is a defense to price discrimination. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Discrimination : Bloom's: Knowledge 60. Quantity discounts violate the Robinson-Patman Act. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Discrimination : Bloom's: Knowledge 61. There is hardly any cross-elasticity in the gasoline market. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 62. The Antitrust Modernization Commission has proposed material changes in the antitrust laws to accommodate e-commerce market changes. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Lies Ahead in Anticompetitive Behavior: The Antitrust Modernization Commission : Bloom's: Knowledge 63. The judicial approach to antitrust cases is one of weighing benefits to competition. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? An Overview of the Federal Statutory Scheme on Restraint of Trade : Bloom's: Knowledge 64. A monopsony is the same thing as a monopoly. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization Monopsony : Bloom's: Knowledge 65. The ability of a customer to control the prices of a supplier in a market is a monopsony. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopsony : Bloom's: Knowledge 66. A monopsony is illegal per se. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopsony : Bloom's: Knowledge 67. 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. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 68. Manufacturers who refuse to deal with discount houses have committed a per se violation of the antitrust laws. a. b. : 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 69. 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. : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? Covenants Not to Compete : Bloom's: Comprehension 70. 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 : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 71. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? An Overview of the Federal Statutory Scheme on Restraint of Trade : Bloom's: Knowledge 72. 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. : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 73. 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 : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? An Overview of the Federal Statutory Scheme on Restraint of Trade : Bloom's: Knowledge 74. 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 : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking What Interferes with Competition? Covenants Not to Compete : Bloom's: Application 75. In Weyerhaeuser v. Ross-Simmons, Weyerhaeuser was found liable for: a. predatory bidding. b. predatory pricing. c. nothing. d. monopsony violations. : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Monopsony : Bloom's: Application 76. 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 : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What are the Penalties and Remedies for Anticompetitive Behavior? : Bloom's: Knowledge 77. 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 : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 78. 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 : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 79. 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 : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 80. 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. : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Horizontal Restraints of Trade : Bloom's: Comprehension 81. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Free Speech and Anticompetitive Behavior : Bloom's: Comprehension 82. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Merging Competitors and the Effect on Competition : Bloom's: Comprehension 83. 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. : d 1 Moderate : United States - BUSPROG: Reflective Thinking: Re - BUSPROG: Reflective Thinking : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 84. 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 : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 85. 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 : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Fixing : Bloom's: Application 86. Which of the following activities is not covered in the Sherman Act? a. attempts to monopolize b. price fixing c. boycotts d. price discrimination : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? An Overview of the Federal Statutory Scheme on Restraint of Trade : Bloom's: Knowledge 87. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Group Boycotts and Refusals to Deal : Bloom's: Application 88. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Monopolization : Bloom's: Application 89. 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. : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Monopolization : Bloom's: Application 90. 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 : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Group Boycotts and Refusals to Deal Price Fixing : Bloom's: Application 91. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Antitrust Issues in International Competition : Bloom's: Application 92. 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. : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Free Speech and Anticompetitive Bahavior : Bloom's: Application 93. 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 : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking What Interferes with Competition? Covenants Not to Compete : Bloom's: Application 94. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What Interferes with Competition? An Overview of the Federal Statutory Scheme on Restraint of Trade : Bloom's: Knowledge 95. 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 : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal What are the Penalties and Remedies for Anticompetitive Behavior? : Bloom's: Knowledge 96. Resale price maintenance is: a. a rule of reason violation. b. an attempt by a retailer to control prices. c. regulated by the Clayton Act. d. all of the above : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 97. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 98. Fair trade contracts are: a. valid. b. permitted under state laws. c. an issue related to resale price maintenance. d. none of the above : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 99. 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 : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Sole Outlets and Exclusive Distributorships : Bloom's: Knowledge 100. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Customer and Territorial Restrictions : Bloom's: Knowledge 101. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Tying Arrangements : Bloom's: Application 102. 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 : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Tying Arrangements : Bloom's: Application 103. Predatory pricing is: a. pricing below cost. b. per se illegal. c. price discrimination. d. none of the above : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Discrimination : Bloom's: Knowledge 104. Vertical mergers are: a. illegal per se. b. mergers between manufacturers and wholesalers. c. regulated by the Sherman Act. d. all of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Vertical Mergers : Bloom's: Knowledge 105. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Sole Outlets and Exclusive Distributorships : Bloom's: Knowledge 106. 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 : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 107. 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 : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 108. 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 : a 1 Knowledge : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 109. 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. : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Tying Arrangements Vertical Trade Restraints : Bloom's: Knowledge 110. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Discrimination : Bloom's: Application 111. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Discrimination : Bloom's: Application 112. 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 : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Vertical Mergers : Bloom's: Knowledge 113. 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 : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Resale Price Maintenance : Bloom's: Knowledge 114. Coca-Cola, Inc. and PepsiCo, Inc. have only one distributor each in the Phoenix area. The Phoenix market is an intensely competitive soft drink market with prices being among the lowest in the nation. A local restaurateur has requested a dealership from PepsiCo and has been denied. He claims an antitrust violation. Which of the following statements is ? a. The denial of the distributorship to someone who can afford it is anticompetitive and is a per se violation. b. The denial is justifiable given the level of interbrand competition. c. The denial is an example of resale price maintenance. d. none of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Sole Outlets and Exclusive Distributorships : Bloom's: Application 115. Homer, Inc. is the western regional distributor for Plato Ice Cream. Homer charges grocers in California $3.00 per half gallon but charges Utah grocers only $2.00 per half gallon. Homer says the Utah ice cream market is much more competitive and he has to meet the market. Utah competitors charge between $2.50 and $2.75 per half gallon. Homer: a. has engaged in price discrimination. b. is simply meeting the competition. c. is exempt from Robinson-Patman because of interstate sales. d. none of the above : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Discrimination : Bloom's: Application 116. Termination of a TV retailer's sales contract with a TV manufacturer by that manufacturer for selling the manufacturer's TVs at too-low prices is: a. a per se violation of the Sherman Act. b. resale price maintenance subject to a rule of reason review. c. price fixing. d. none of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Resale Price Maintenance : Bloom's: Application 117. Salads 'R' Us requires all its franchisees to sign an agreement that they will use napkins and dressings purchased from Salads 'R' Us. Unless the agreement is signed, no one is awarded a franchise. Salads 'R' Us maintains that the agreement is necessary to preserve uniformity and quality in all franchise outlets. The purchasing requirement is: a. an illegal tying arrangement. b. valid as a quality control mechanism for protection of goodwill. c. coercion and is invalid. d. none of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Tying Arrangements : Bloom's: Application 118. Competition among Colgate, Crest, and Aim toothpastes is: a. intrabrand competition. b. interbrand competition. c. controllable through resale price maintenance. d. none of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Sole Outlets and Exclusive Distributorships : Bloom's: Application 119. Sedres, Inc. is the manufacturer of the current best-selling TV video game system. Sedres will not sell parts for repair of the systems to anyone other than its authorized dealers. All Sedres authorized dealers are required to send used parts back to Sedres. Sedres will terminate an authorized dealer if it uses non-Sedres parts for repairs. Sedres' policies on dealers: a. constitute violations of the Sherman Act. b. are simply valid quality control mechanisms. c. are valid since no one is barred from entry. d. would be violations only if there were no other TV video game manufacturers. : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Sole Outlets and Exclusive Distributorships : Bloom's: Application 120. Toys R Us is an international toy retailer. The Justice Department has just filed a complaint against the giant retailer alleging that Toys R Us refuses to carry toy lines or toys if the manufacturers sell their products to discount warehouse stores such as Sam's Club or Costco. Toys R Us maintains that when manufacturers sell toys to these warehouses, they sell only the hot toy items for the Christmas season at large discounts. Their pricing undercuts Toys R Us and Toys R Us must carry a full line of toys, even those they do not share the same demand levels. Toys R Us: a. has not violated any antitrust laws. b. may have engaged in a refusal to deal. c. may have engaged in a price-fixing conspiracy. d. both b and c : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Group Boycotts and Refusals to Deal Price Fixing : Bloom's: Application 121. The eventual result in the U.S. v. Microsoft case was: a. Bill Gates was sentenced to one year in prison for violations of the Sherman Act. b. The court concluded there were no violations of the Sherman Act. c. The court concluded that Microsoft violated the Sherman Act. d. The court concluded that Microsoft did not possess monopoly power. e. none of the above : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Monopolization : Bloom's: Knowledge 122. What is it called when officers of competing companies serve on each others’ boards of directors? a. Intralocking directorates b. Interlocking directorates c. Cross-locking directorates d. Diagonal directorates : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Subtle Anticompetitive Behavior: Interlocking Directorates : Bloom's: Knowledge 123. If clients of a brokerage house feel that there are anticompetitive activities being used among and between the various brokerage houses that result in price impacts for them, then: a. their remedy is under the Sherman Act for price fixing or monopolization. b. their remedy is under the Clayton Act for vertical price discrimination. c. their remedy is under the federal securities laws and regulations. d. none of the above : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking What Interferes with Competition? An Overview of the Federal Statutory Scheme on Restraint of Trade : Bloom's: Application 124. Action Outfitters is a national manufacturer and retailer of outdoor gear. When it agrees to sell its merchandise to a retailer, the retailer must also agree to purchase Action’s outfits for clerks, its displays, its shopping bags, and its gift boxes. Action says that these items are part of its brand identification. A retail outlet has brought suit because it only wants the Action merchandise and does not want the outfits, displays, bags, or boxes. a. The suit is one for tying. b. There is no cause of action here because manufacturers can dictate all the terms of sale and whether they will sell to a retailer. c. The suit is one for monopolization. d. none of the above : d 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Tying Arrangements : Bloom's: Application 125. Four major insurance brokers agreed that when it came time for renewals of coverage with major customers that only one of them would submit a reasonable bid. The three others would submit a much higher price and thereby not be in the running for the renewal. The agreements of the insurance brokers: a. save time and money and are not anticompetitive. b. are an example of vertical trade restraint. c. are an example of horizontal trade restraint. d. are an example of tying. : c 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 126. Cicily Bridgeport and Collin Wilson own Northeastern Galleries and Upper West Galleries, respectively. For artists displaying paintings in their galleries, Cicily and Collin charge a 22% commission for any sales made. Cicily and Collin have always charged 22%, but there is a slump in sales. When Cicily meets Collin at a Met event, she suggests, “Collin, let’s both go to 25%. What can they do if we both charge 25% and we can earn enough to make up for the market downturn.” Cicily: a. has committed a per se violation of the Sherman Act. b. has committed a per se violation of the Clayton Act. c. has agreed to a group boycott. d. none of the above : a 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 127. Universal Syndication has told television stations and networks that they cannot have the rights to play "Friends" reruns unless they also agree to take packages of Charlie Chan movies, Tony Orlando and Dawn, and Rin Tin Tin reruns. The stations and networks complain that Chan movies, Tony, and Rin Tin Tin reruns do not draw viewers and that they have trouble selling the ad time on such shows. Universal Syndication’s requirement: a. is a tying arrangement that is a per se violation of federal antitrust law. b. is a tying arrangement that may be a violation of federal antitrust law. c. is one that it is free to impose so long as other syndicators are selling shows. d. none of the above : b 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Tying Arrangements : Bloom's: Application 128. Blue Cross, a medical insurer, publishes lists of "usual, customary, and reasonable" rates for medical services. Blue Cross insureds can then shop for medical services to be certain they are fully covered. A physician who charges rates higher than Blue Cross alleges there is a combination in restraint of trade to force him out of business and a price-fixing conspiracy. Is he right? : See Ratino v. Medical Service of D.C., 718 F.2d 1260 (4th Cir. 1983); Arizona v. Maricopa County Medical Society, 457 U.S. 332 (1982). Blue Cross is not a competitor. The others are just trying to attract business. If the others owned Blue Cross, the decision might be different. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 129. Zenith Radio and other American TV manufacturers brought suit against Japanese TV manufacturers for charging artificially low prices in the United States. Can the Japanese manufacturers be sued in the United States? : Yes, if they're doing business here. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574 (1986). 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 130. Several art distributors have met and agreed to limit the number of Hummel figurines being imported into the United States. Is there any anticompetitive behavior involved in doing this? : Yes, by limiting quantity, they can keep prices artificially high. W. Goebel Porzellanfabrik v. Action Industries, 1984 trade cases, 66,287. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Legal Price Fixing : Bloom's: Application 131. Sales representatives of several college-book publishers have met together and decided that calling on all schools in their territories is often fruitless, since only one of each of their books can be adopted. They have agreed to split the colleges and only make sales calls on their designated schools. Are there any anticompetitive problems? : Yes. The agreement is a per se violation - division of markets. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Divvying up the Markets : Bloom's: Application 132. Several gypsum manufacturers have agreed (for union purposes) to limit the number of deliveries per day. They can meet the union demands by doing so. Are there any problems with the agreement? : While the motivation is noble, it is, nonetheless, an agreement to limit supply and is price fixing. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 133. Colleges and universities around the country keep a common pool of information among them about National Merit Scholars and disclose in their pool information about tuition, scholarship packages, and financial aid. Is such a pool of information appropriate under federal antitrust laws? : The Justice Department recently entered into consent decrees with a number of Ivy League schools on the issue of fixing financial aid packages. This exchange of information and agreement on scholarship made competitive college shopping impossible for the applicants and represented an exchange of price information. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 134. Georges Marciano Guess Company sells its clothes with tags on them with a price indicating "suggested retail price." Are there any antitrust violations with this practice? : No, unenforced suggestions are okay. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 135. Greg Rafft, president of the Tricounty Brokerage Association, addressed the members at a luncheon meeting. He suggested that the association purchase two of the area's top three title insurance firms. Are there any antitrust problems with such an acquisition? : Having brokers own such a large share of an integral service might lessen competition. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Monopolization : Bloom's: Application 136. X-ron Perfume is sold only in one major department store for each city. X-ron will deal only with one department store and will not sell to other stores. Are there any antitrust violations with this arrangement? : Not so long as there is interbrand competition - intrabrand competition can be limited. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Sole Outlets and Exclusive Distributorships : Bloom's: Application 137. Pat's Bicycle Shop is a Schwinn dealer. In order to be such a dealer, Pat's has to agree not to carry other brands of bicycles. Is this agreement illegal? : Key is interbrand competition in the area. If there is none, this agreement is probably anticompetitive. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Sole Outlets and Exclusive Distributorships : Bloom's: Application 138. Guernzey Milk produces canned milk under its label and several grocery-store labels. The content is the same but the grocery-store labels are sold for less. Guernzey says the packaging for the grocery store brands is cheaper. Any antitrust problems? : Could be price discrimination if label cost isn't accurate; like commodities must be sold for same price. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Discrimination : Bloom's: Application 139. 324 Liquor Corporation is a retail liquor and wine dealer. In New York, the wholesalers establish the prices for retail sales and the State Liquor Authority enforces those prices. 324 was cited for violations when it sold a State Liquor Authority investigator a bottle of Chatham Gin for $9.45 (the price was to be $9.65) and a bottle of Smirnoff for $11.59 (the price was to be $11.89). At the hearing, 324 contends that the statutory scheme for regulating prices violates the antitrust laws. Is 324 correct? : A state can regulate prices, but it is the state and not the wholesalers who must regulate those prices. The setup in New York affords too much control to the businesses and will not be exempt from the antitrust laws with such a form of setting prices. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Discrimination : Bloom's: Application 140. Gardner-Denver is the United States' largest manufacturer of ratchet wrenches. Rogers, a former Gardner-Denver employee, formed D.E. Rogers and began selling ratchet wrench parts. From 1964 to 1971, the two competed with Rogers charging prices 30 percent below Gardner-Denver's. In August 1971, Gardner-Denver began a dual price system: Blue list - discounts for quantities of five or more (blue list parts were largely Rogers' parts); white list - non-Rogers' parts. The blue list was given only to Gardner-Denver sales reps. A price war followed with Rogers filing an antitrust suit. Are there any antitrust violations? : The court found no violation and that the effect of the price lists was to encourage competition. See D.E. Rogers Associates, Inc. v. Gardner-Denver, Co., 718 F.2d 1431 (6th Cir. 1983). 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 141. The price for a Super-Heater X50, a residential water heater, is $372.00 at every store in the greater Atlanta area. The water heater never goes on sale at any of the stores. Super-Heater sells other models of water heaters: the X30 for $301.00 and the X60 for $408.00. There is no store selling the heaters for a different price either. Other companies' water heaters sell at the retail levels at prices ranging from $299-$603. During sales, those prices drop. Is the Super-Heater pricing mechanism a violation of antitrust laws? : There appears to be interbrand competition, but controlled pricing. The consciously parallel price would raise a judicial eyebrow. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Resale Price Maintenance : Bloom's: Application 142. Hospitals in Arizona, New Mexico and Colorado are regulated on their emergency room fee schedules by a state hospital emergency room board. The board consists of representatives from all of the hospitals in the state. The board meets twice each year and establishes the prices for emergency room care. The states have assumed a regulatory oversight rule because of the need for universal access for emergency care. The prices charged for emergency room care in these 3 states exceed the average charges in California, Utah, Nevada, Idaho, Oregon and Washington. Patients who experience the higher charges in Arizona, New Mexico and Colorado are concerned about the higher rates. Discuss any legal rights and remedies they may have. : Even when prices are established by a regulatory body, those prices can be challenged as anticompetitive if it can be shown that there was no meaningful oversight over the industry as it established its own rates. The patients may have a class action suit in which they could recover treble damages for the collusion via government agency. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application 143. Explain why the U.S. Supreme Court now applies a rule of reason standard to manufacturers who will no longer sell to retailers who offer deep discounts on the manufacturers’ products. : The court held that enforcing suggested retail prices was not a per se violation because there were services and consumer assistance that full-service retailers provide that are not available at deep discounters Consumers have the ability to become more informed and make the choices on service when these options are there. The court held that trials must examine the effects on competition of such practices in particular markets and not just outlaw the enforcement altogether. 1 Moderate : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Resale Price Maintenance : Bloom's: Application 144. The American Kennel Club (AKC), an independent organization that establishes standards for breeding and for certification of purebred dogs issued standards for all purebred dog breeds and recommended standards for Labradors. The result was that an English strain of Labradors did not meet the minimum height standards that the AKC recommended, and U.S. breeders of a taller American strain were able to monopolize the market for championship dogs. Which of the following statements is correct? a. The AKC has violated the Sherman Act. b. The AKC, however well intentioned, cannot impose standards on an industry. c. The AKC has not violated the Sherman Act. d. The AKC has violated the Sherman Act if U.S. breeders did benefit from the standards. : c 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Monopolization : Bloom's: Application 145. Cal-Maine Foods was the defendant in an antitrust suit brought by the purchasers of eggs. Cal-Maine is an egg distributor and the suit accused Cal-Maine of manipulating the egg supply in order to increase prices. Egg prices jumped 28% in 2007 and 14% in 2008 as egg supplies dwindled. Cal-Maine said that following industry-wide animal-welfare guidelines resulted in fewer chickens per farm and, as a result, fewer eggs. Which of the following statements is correct? a. Reducing supplies that affect prices is not covered under the antitrust laws. b. Cal-Maine would have had to conspire with a competitor for the antitrust laws to apply. c. Cal-Maine is not liable to the purchasers of eggs, only the stores that bought the eggs. d. none of the above : c 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Price Fixing : Bloom's: Application Anheuser-Busch, InBev NV, the maker of Bud Light, proposed a merger with Modelo, the maker of Corona. At the time of the proposed merger, AB InBev NV held 39% of the beer market, Miller/Coors held 26%, Modelo held 7%, and Heineken, the last of the big four held 6%. Other beer makers combined hold the remaining 22% of the U.S. beer market. The combination would give AB InBev NV 46% of the market. Modelo has been one of the market players that has resisted the parallel price increases in the industry. 146. Which of the following statements is correct? a. The merger would raise questions at the Justice Department about market power. b. The merger would be approved because there are so many other competitors. c. The merger would be approved because there are so many different beers and the relevant market is defined by individual types of beers. d. The Sherman Act does not apply to alcohol companies. : a 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Monopolization : Bloom's: Application 147. Which of the following is correct? a. The merger proposed is a vertical one. b. The merger proposed is a horizontal one. c. The merger is simply an asset acquisition. d. The merger is exempt under the failing company doctrine. : b 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Horizontal Restraints of Trade : Bloom's: Application 148. Yazaki, an auto parts manufacturer, made agreements with three competitors to decide in advance who would bid on contracts with auto manufacturers and what the price would be. The auto parts manufacturers then took turns winning various contracts. Which of the following statements is correct? a. The companies engaged in resale price maintenance. b. The companies created a monopsony. c. The companies were involved in a tying arrangement. d. The companies were involved in divvying up the market and price-fixing. : d 1 Challenging : United States - BUSPROG: Analytic : United States - OH - AICPA: BB-Critical Thinking Divvying up the Markets Price Fixing : Bloom's: Application [Show More]

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