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Quiz 1
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1
The principle focus of the Food and Drug Administration is:
A)social regulation
B)industrial regulation
C)antitrust policy
D)tying contracts
2
Which policy was applied in the Microsoft antitrust case to assert that the mere possession of monopoly power was not in itself a violation of the Sherman Act?
A)Per se violation
B)Rule of reason
C)Structuralist view
D)Active antitrust perspective
3
The Celler-Kefauver Act prohibits corporations from merging by purchasing the stock of competing firms when the outcome would be less competition.
A)True
B)False
4
Unlike a vertical merger, a horizontal merger:
A)will not increase industry concentration
B)does not violate antitrust laws
C)will increase the Herfindahl index
D)is a per se violation of the Sherman Act
5
The Federal Trade Commission Act:
A)is an amendment to the Clayton Act
B)prohibits interlocking directorates
C)prohibits states from independently pursuing antitrust activity
D)established the FTC as an independent antitrust agency
6
A company requires that anyone wishing to purchase its MP3 player must also purchase its proprietary headphones. This practice is made illegal under the:
A)Sherman Act
B)Clayton Act
C)Wheeler-Lea Act
D)precedent established in the U.S. Steel case
7
The philosophical basis for the Sherman Act and the Clayton Act is that:
A)firms with monopoly power restrict output and raise prices
B)perfect information is needed to foster competitive outcomes
C)negative externalities lead to an overallocation of resources to some industries
D)deregulation of industries will foster competition and lower prices
8
The final negotiated settlement of the Microsoft case in 2002 required Microsoft to:
A)divest itself of stock holdings in other software companies
B)split into two separate companies—a software company and an operating system company
C)provide a current copy of its full operating code to any competing firm that asks for it
D)allow pc manufacturers to remove Microsoft icons from the pc desktop and replace them with other icons
9
Answer the next question on the basis of the following table showing the market shares of 6 firms in four hypothetical industries, labeled W through Z. Assume these are distinct industries with no buyer-seller relationships or competition among them.
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Refer to the table. A merger between firm 3 and firm 5 in industry X would be:
A)a vertical merger
B)a horizontal merger
C)a conglomerate merger
D)illegal under the Clayton Act
10
The U.S. Steel case and the Alcoa case:
A)both solidified the rule of reason approach to antitrust
B)both established that mere possession of monopoly power violated antitrust law
C)differed in that the former established the rule of reason and the latter held that mere possession of monopoly power was illegal
D)differed in that the former held that mere possession of monopoly power was illegal and the latter established the rule of reason





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