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Chapter 3 Review!
Government Regulation of Competition and Prices
| Term | Definition |
|---|---|
| What is the purpose of the Sherman Antitrust Act? | To prohibit contracts, combinations, and conspiracies that restrain trade and to outlaw monopolization. |
| What does Section 1 of the Sherman Act prohibit? | Agreements that unreasonably restrain trade. |
| What does Section 2 of the Sherman Act prohibit? | Monopolization and attempts to monopolize a market. |
| What is price fixing? | An agreement among competitors to set prices at a certain level. |
| What is market allocation? | An agreement among competitors to divide territories or customers. |
| What is bid rigging? | A scheme where competitors coordinate bids rather than compete fairly. |
| Antitrust Law | Laws designed to promote competition and prevent monopolies and unfair business practices |
| What is a monopoly? | A market structure in which one company controls a large share of a market. |
| What is predatory pricing? | Selling products below cost to eliminate competitors. |
| What is the Clayton Act? | A law that prohibits specific business practices that may substantially lessen competition. |
| What is a merger? | The combination of two companies into one entity. |
| What is a horizontal merger? | A merger between companies that compete in the same market. |
| What is a vertical merger? | A merger between companies operating at different levels of the supply chain. |
| What is a conglomerate merger? | A merger between companies in unrelated industries. |
| What is an exclusive dealing contract? | An agreement requiring a buyer to purchase exclusively from one seller. |
| What is tying? | Requiring a customer to buy one product in order to obtain another product. |
| What is price discrimination? | Charging different prices to different buyers for the same product without a justified cost difference. |
| What is the Robinson-Patman Act? | A law that prohibits certain forms of price discrimination. |
| What is the Federal Trade Commission (FTC)? | An agency that enforces antitrust and consumer protection laws. |
| What is unfair competition? | Business practices that deceive consumers or harm competitors. |
| What is the Federal Trade Commission Act? | A law prohibiting unfair methods of competition and deceptive business practices. |
| What is a per se violation? | A practice considered automatically illegal under antitrust law. |
| What is the rule of reason? | A legal analysis that evaluates whether a business practice unreasonably restrains trade. |
| What is a cartel? | A group of businesses that coordinate prices or production to reduce competition. |
| What is consumer welfare? | The benefit consumers receive from competitive markets, including lower prices and greater choices. |
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