Economics For Today

10th Edition
Publisher: Cengage Learning
ISBN: 9781337613040



Economics For Today

10th Edition
Publisher: Cengage Learning
ISBN: 9781337613040
Chapter 13, Problem 6SQ
Textbook Problem

Which of the following was not illegal under the original Clayton Act?

  1. a. Tying contracts
  2. b. Interlocking directorates
  3. c. Merger by purchase of assets with cash
  4. d. All of the above were illegal under the original Clayton Act.

To determine

The action which is not illegal under the Clayton act.

Explanation of Solution

The market competition is the situation in which there are many sellers and buyers in the market. When there are many competitors in the market, there will be competition among them in price, quality and quantity. This competition is very important for the healthy market economy. There are many actions that reduces the market competition and one amongst them is the cartelization which is the process of making a formal group of sellers that agrees to sell the product at a unified higher price and controlling the market supply. Such actions are being controlled by the anti-trust laws in the US economy. Thus, the laws are also known as the competition laws that prevents the consumers from the predatory business practices.

Option (c):

The Clayton antitrust law was also introduced in the year of 1914 and it was an addition to the US anti-trust laws as it added further substances to make the anti competitive measures strict. It prevented the anticompetitive actions in their incipiency. The takeover of a firm through the purchase with the cash was not considered as a cartel and this was not considered illegal under the Clayton act and that means option 'c' is the correct answer...

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