The Clayton Act of 1914:
outlawed price discrimination, tying contracts, intercorporate stockholding, and interlocking directorates that lessen competition.
Which one of the following is not prohibited by the original Clayton Act?
the purchase of the assets of rival firms that lessens competition
Which of the following amended the Clayton Act's prohibition against mergers that substantially lessen competition?
Celler-Kefauver Act of 1950
The antitrust laws are based on the:
idea that competition leads to greater economic efficiency than does monopoly.
The antitrust laws are enforced by the:
Federal Justice Department and the Federal Trade Commission.
Interlocking directorates are:
illegal under provisions of the Clayton Act of 1914.
The government was successful in gaining an antitrust conviction in the:
Alcoa case.
In which of the following cases did the final court decision result in a breakup of the firm into competing businesses?
Standard Oil case
In the Microsoft antitrust case, the Federal government said in essence that:
Microsoft was a "bad monopoly.
In the U.S. Steel case, the court ruled that:
only monopolies that unreasonably restrain trade are subject to antitrust action under the Sherman Act.
A merger between an automobile manufacturer and a maker of automobile tires is an example of a:
vertical merger.
A merger between a maker of household detergents and a fast food chain would be an example of:
a conglomerate merger.
A vertical merger involves a combining of one or more firms:
operating at different stages of the production process in a particular industry.
Price fixing is considered to be a per se violation of the antitrust laws because:
a guilty verdict requires proof that the activity was attempted, not that it unreasonably restrained trade.
Which of the following is correct?
Vertical mergers are more likely to be acceptable under antitrust laws than are horizontal mergers.
Suppose the firms in a five-firm industry have market shares of 30, 30, 20, 10, and 10 percent, respectively. The Herfindahl index for the industry is:
2,400.
Suppose that two firms in an industry with a Herfindahl index of 5,000 announce a merger. The U.S. Justice Department concludes the merger will boost the index to 5,500. The antitrust authorities will most likely:
prevent the merger, contending that it violates the Clayton Act.
Economists who adhere to the laissez-faire antitrust perspective:
view competition as a long-run dynamic process in which firms battle for dominance of markets but rarely can sustain such dominance once it is achieved.
Suppose the transportation industry has been regulated for many years. Government now proposes to deregulate the industry, only to find that firms in the industry oppose this action. This is consistent with the:
legal cartel theory of regulation.
Using antitrust law to split up an unregulated natural monopoly into several competing firms:
might either increase product price or reduce product price.
Critics of the regulation of natural monopolies contend that:
the industry may "capture" or control the regulatory commission.
The legal cartel theory of regulation argues that:
firms in certain industries want to be regulated rather than face the rigors of competition.
Critics of social regulation argue that it:
is a relatively greater burden for small firms than for large firms.
Congressional representatives have called for extensive ergonomics regulations to reduce strains and injuries from repetitive activities by workers. Such regulation, if passed, would be a good example of:
social regulation.
(Consider This) According to the Consider This box on catfish and art, which of the following firms were recently convicted of price fixing?
Sotheby's and Christy's (art auction houses)
Responsibility for enforcing the antitrust laws rests:
with both the Department of Justice and the Federal Trade Commission.
Suppose the courts declare that XYZ Corporation violated the antitrust laws and as a result the ABC Corporation lost $100 million of profits. XYZ Corporation will have to pay ABC Corporation a monetary award of:
$300 million.
Price fixing:
is a per se violation of the antitrust laws.
The main purpose of the antitrust laws is:
to prevent the monopolization of industries.
The "rule of reason" indicated that:
only contracts and combinations that unreasonably restrain trade violate the antitrust laws.
The decision in the U.S. Steel case:
reflected a behavioralist approach to antitrust.
Which one of the following is most likely to increase the Herfindahl index of a particular industry?
a horizontal merger
Conspiracies to fix prices are:
per se violations of the antitrust laws.
Which one of the following is not correct?
Antitrust suits can only be originated by the Federal Trade Commission.
Which of the following is characteristic of a regulated natural monopoly?
all of these
A major criticism of industrial regulation is that:
by allowing a fair return price, it gives natural monopolists little incentive to contain costs.
A market in which the entire demand for a good or service can be satisfied at the least cost by a single firm is a:
natural monopoly.
Where there is natural monopoly, government is most likely to implement:
industrial regulation.
Defenders of social regulation point out that:
critics who stress the high administrative and compliance costs of social regulation underestimate the social benefits that the regulations produce.
Social regulation differs from industrial regulation in that:
social regulation applies to virtually all industries, while industrial regulation applies to a restricted number.
Which one of the following is concerned with social regulation?
Equal Employment Opportunity Commission
(Last Word) In 2001, Microsoft was found guilty of:
using anticompetitive means to maintain and broaden its monopoly in Intel-compatible operating systems for personal computers.
(Last Word) The final settlement of the United States v. Microsoft case:
requires that Microsoft provide technical information to competing companies so they can develop software programs that work as well with Windows as Microsoft's own products.
All of the following can file antitrust charges under the Sherman Act except:
the Federal Energy Regulatory Commission.
Movie producers A, B, and C secretly meet and agree to release their summer blockbuster films in sequence, rather than at the same time. The U.S. Justice Department learns of the agreement and files an antitrust suit. The Federal government would most lik
Sherman Act, Section 1.
Tying agreements:
obligate a purchaser of product X to also buy product Y from the same seller.
The Sherman Act:
declared monopoly and restraints of trade to be illegal.
The Federal Trade Commission:
is empowered to file antitrust suits.
In the U.S. Steel case of 1920 the courts held that:
although U.S. Steel possessed monopoly power, it had not violated the Sherman Act because it had not unreasonably used that power.
Which of the following is most likely to increase the Herfindahl Index of a particular industry?
a horizontal merger between two of the industry's largest firms.
Behavioralists believe that:
industries should be judged on the basis of their price-output behavior and their technological progressiveness.
The view that the antitrust laws need to be strongly enforced to prevent illegal business behaviors, monopolization of markets, and allocative inefficiency is known as the:
active antitrust perspective.
Overall, economists believe that deregulation of industries formerly subjected to industrial regulation:
has produced large net benefits for consumers and society.
Social, as distinct from industrial, regulation is the major focus of the:
Consumer Products Safety Commission.
(Consider This) According to the Consider This box on catfish and art, which of the following airlines in 2007 agreed to pay $300 million fines for fixing fuel surcharges on passenger tickets and cargo?
Korean Air and British Airlines
(Last Word) In 2001, a U.S. court of appeals tossed out an earlier U.S. district court order that Microsoft:
be split into two competing firms.
A function of the Federal Trade Commission is to:
investigate instances of faulty and misleading advertising.
Tying contracts are illegal under the:
Clayton Act of 1914.
Which of the following gave the Federal Trade Commission responsibility to protect the public against false and misleading advertising?
Wheeler-Lea Act of 1938
Which of the following made monopoly and restraints of trade criminal offenses against the Federal government?
Sherman Act of 1890
The Celler-Kefauver Act of 1950: (1)
amended the Clayton Act.
The Celler-Kefauver Act of 1950: (2)
prohibited any firm from acquiring the real assets of another firm where the effect was to lessen competition.
In which of the following cases was the firm found not guilty of violating the Sherman Act?
DuPont cellophane case
A conglomerate merger:
can extend the line of products sold, extend the territories in which products are sold, or combine totally unrelated products.
A firm charged with monopolizing a market is less likely to be convicted if:
the court accepts a broad definition of the market.
Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger. The U.S. Justice Department concludes the merger will boost the index to 1,050. The antitrust authorities will most likely:
ignore this merger because of the relatively small size of, and increase in, the Herfindahl index.
Which one of the following is concerned with industrial regulation, as distinct from social regulation?
Federal Communications Commission
The main purpose of industrial regulation is to:
lower price to average total cost such that the firm earns a fair return.
(Consider This) The Consider This box "Of Catfish and Art (and Other Things in Common)" lists examples of recent antitrust cases involving:
price fixing.
(Last Word) In 2001, Microsoft was found guilty of violating:
Sections 1 and 2 of the Sherman Act.
Which of the following is least likely to violate the Sherman Act or the Clayton Act?
competitive firms F and G independently charge lower prices to frequent customers than to occasional customers.
Which one of the following acts declared "Every contract, combination ... or conspiracy, in restraint of trade or commerce among the several states ... to be illegal"?
the Sherman Act
Which of the following laws prohibited mergers by stock acquisition if the effect was to lessen competition?
Clayton Act of 1914
In which of the following pairs of antitrust cases did the firms prevail against the antitrust charges leveled against them?
the DuPont cellophane case and the U.S. Steel Case
The basic issue in the DuPont cellophane case was:
defining the relevant market.
Suppose a court rules that the ABC Corporation is in violation of the antitrust laws because it produces 70 percent of the output of its industry. This decision is consistent with the:
Alcoa case.
Critics of industrial regulation say that such regulation:
perpetuates monopoly long after new technology has eroded natural monopoly.
The largest efficiency gains from deregulation have occurred in the:
airlines, trucking, and railroad industries.
The optimal amount of social regulation occurs where the marginal benefit of such regulation:
equals the marginal cost.
(Consider This) The Consider This box "Of Catfish and Art (and Other Things in Common)" lists examples of recent antitrust cases involving:
price fixing.
Which of the following is directly illegal under the Sherman Act?
price fixing