Chapter 26

Farmed Crops Corporation offers to sell its wheat substitute to Gluten-Free, Inc., only if Gluten-Free agrees to buy all of the wheat substitute that it needs from Farmed Crops, even though there are other sellers from whom Gluten-Free could buy. This is a. an exclusive-dealing contract. b. a tying arrangement. c. price discrimination. d. business acumen.

a. an exclusive-dealing contract.

PriceLess Discount Company and Quotidian Stores, Inc., agree to abide by the decisions of Retail Financial Corporation as to their respective levels of production, markets, and prices, effectively reducing competition and increasing profits. This is most likely a. an illegal restraint on trade. b. an innovative, legally efficient approach to doing business. c. a common, legal, time-honored type of business arrangement. d. an outdated, but legal business trust. Hide Feedback

a. an illegal restraint on trade.

Excavators & Haulers, Inc., is the major wholesale distributor of heavy equipment in the state of Georgia. Its closest competitor is Forklifts & Tractors Company, another Georgia firm. The two firms agree that Excavators will operate in southern Georgia and Forklifts will operate in northern Georgia. This is a. a price-fixing agreement. b. a market division. c. an exclusive-dealing contract. d. a joint venture. Hide Feedback

b. a market division.

Bodycare Pharma Corporation makes and sells ChemMed, the most prescribed name-brand blood pressure-lowering medication. Deja Vu Drugs, Inc., has the potential to make a generic version of the same drug. Bodycare pays Deja Vu not to sell its product. This is a. a market division. b. a price-fixing agreement. c. an exclusive-dealing contract. d. a joint venture.

b. a price-fixing agreement.

To acquire monopoly power in its market, Global Positioning Systems, Inc., sets its prices substantially below the normal costs of production. Under antitrust law, this is a. a violation if its competitors set similar prices. b. a violation if it thereby acquires monopoly power. c. a per se violation. d. not a violation. Hide Feedback

b. a violation if it thereby acquires monopoly power.

Earthgrown Flora, Inc., is one of many producers of cut flowers. Earthgrown refuses to sell its products to Florist Shops Corporation. Under antitrust law, this refusal is most likely a. a violation if it thereby acquires monopoly power. b. a violation if its competitors make similar deals. c. not a violation. d. a per se violation.

c. not a violation.

Pads & Pods Corporation requires all distributors of its products to sell the products at specified minimum prices. This resale price maintenance agreement is a. not subject to antitrust law. b. a legal restraint of trade. c. subject to evaluation under the rule of reason. d. a per se violation of antitrust law.

c. subject to evaluation under the rule of reason.

Speedee Snoboards, Inc., refuses to sell its products to Timber Mountain WinterSports Stores, Inc., a retail snowboard dealership. This is a. a territorial restriction. b. an exclusive-dealing contract. c. attempted monopolization. d. a unilateral refusal to deal.

d. a unilateral refusal to deal.

To prevent its competitors from obtaining sufficient supplies to make their products, Continental Steel, Inc., uses its market power to increase the prices of those supplies. This is a. price discrimination. b. business judgment. c. predatory pricing. d. predatory bidding. Hide Feedback

d. predatory bidding.

By contract, Oil Shale Corporation forbids Petro Refining, Inc., a wholesale buyer of Oil Shale's products, from purchasing the products of its competitors. This exclusive-dealing contract is allowed a. unless its effect is to cause a competitor a loss of any business. b. under any circumstances. c. unless there is no effect on a competitor. d. unless its effect is to substantially lessen competition.

d. unless its effect is to substantially lessen competition.