1.         As of the writing of this text, the outcome of the Microsoft antitrust case was that

a.         Microsoft was ordered to be split into two companies – one for the operating systems and one for applications --- and that ruling was upheld by the Appeals Court.

b.         Microsoft settled its case with the Justice Department, although some states chose not to accept the settlement and continue to pursue the case against Microsoft.

c.         Microsoft settled its case with the Justice Department and all parties involved accepted the settlement.

d.         the Supreme Court ruled that Microsoft had violated the Sherman Act.

e.         none of the above

2.         The benefits (for consumers) of the hub-and-spoke system used by airlines are __________ and the costs are __________.

a.         lower ticket prices; more security at airports

b.         more airports; lower-quality planes

c.         better service on airplanes; higher ticket prices

d.         lower ticket prices; inconvenience and longer travel time

e.         none of the above

3.         The problem with a monopoly is that a monopoly

a.         produces a smaller output than that produced by a perfectly competitive firm.

b.         charges a higher price than the price a perfectly competitive firm would charge.

c.         creates a deadweight loss to society.

d.         a and b

e.         a, b, and c

4.         The  _____________________ made it possible for firms to compete with AT&T in the long-distance telephone service industry.

a.         development of microwave transmission technology

b.         passage of the Celler-Kefauver Antimerger Act of 1950

c.         expiration of Alexander Graham Bell’s original patents

d.         a and c

5.         The statement, “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of the trade or commerce…shall be guilty of a misdemeanor” is a part of the

a.         Clayton Act.

b.         Robinson-Patman Act.

c.         Sherman Act.                                                                         

d.         Wheeler-Lea Act.

e.         none of the above

6.         In the case that the Justice Department brought against IBM, IBM argued that the Justice Department had

a.         defined its market too narrowly.

b.         failed to prove that IBM had conspired to fix prices.

c.         failed to prove price discrimination.

d.         b and c

e.         none of the above

7.         It used to be theorized that __________ firms were the most likely to innovate, but in recent years, new information has suggested that __________ firms are greater innovators. If true, this makes antitrust intervention in the case of mergers __________ important.

a.         small; large; more

b.         small; large; less

c.         large; small; more

d.         large; small; less

8.         Large firms may be more likely to innovate because

a.         the risks of failure are less to them than to small firms.

b.         they can attract the capital needed more easily.

c.         they can more easily attract the scientists and engineering staff they need.

d.         a, b and c

9.         The presidents of the universities X and Y meet over coffee each year and decide what tuition and fees each will charge, and what financial aid packages each campus will provide. This __________ a violation of antitrust laws because __________.

a.         is not; universities are specifically exempted from antitrust enforcement

b.         is not; tuition is not a “price” in the legal sense

c.         is not; universities are non-profit companies

d.         is; it is collusion on price

10.       Antitrust regulators may block horizontal mergers because they would lessen

a.         competition.

b.         innovation.

c.         the possibility of new entrants into the market.

d.         a and c

e.         a, b and c