Cross 9e TBB Ch27

2492 Words May 28th, 2015 10 Pages
Chapter 27

Antitrust Law

N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.

N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.

TRUE/FALSE QUESTIONS

1. The purpose of antitrust law is to reduce competition.

ANSWER: F PAGES: Introduction TYPE: N BUSPROG: Analytic AICPA: BB-Legal

2. Any activity that substantially affects interstate commerce falls outside the scope of antitrust laws.

ANSWER: F PAGES: Section 1 TYPE: N BUSPROG: Analytic AICPA: BB-Legal

3. Market power is the ability of a firm to enter a given market.

ANSWER: F PAGES: Section 1 TYPE: N BUSPROG:
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a federal trade commission act.
b. an antitrust law.
c. an interstate commerce act.
d. a suppressive restraint on trade.

ANSWER: B PAGES: Introduction TYPE: = BUSPROG: Reflective AICPA: BB-Legal

2. Discount Retail Corporation may be engaging in conduct that vio­lates the Sherman Act. To bring an action against the firm requires that its conduct have a sig­nificant impact on

a. international commerce.
b. Internet commerce.
c. interstate commerce.
d. intrastate commerce.

ANSWER: C PAGES: Section 1 TYPE: = BUSPROG: Reflective AICPA: BB-Legal

3. Soft Drink Corporation is charged with violating the Sherman Act through conduct subject to the rule of reason. When applying the rule of reason in this situation, a court will not consider

a. the purpose of the agreement.
b. the parties’ market ability to implement the agreement.
c. the effect of the agreement on international trade.
d. the potential effect of the agreement on competition.

ANSWER: C PAGES: Section 1 TYPE: N BUSPROG: Reflective AICPA: BB-Legal

Fact Pattern 27-1 (Questions 4–5 apply)
Natural Gas, Inc., and Olio Energy Company refine and sell natural gas. To limit the supply of natural gas on the market and thereby raise prices, Natural Gas and Olio Energy agree to buy “excess” supplies from dealers and “dispose” of it.

4. Refer to Fact Pattern 27-1. The agreement between Natural Gas and Olio Energy is

a. a horizontal restraint.
b. none of the choices.
c. a resale price maintenance

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