Question

1Modern Justice Department guidelines evaluate mergers according to how they would change the industry's

Group of answer choices

Herfindahl index.

four-firm concentration ratio.

eight-firm concentration ratio.

twelve-firm concentration ratio.

2Which antitrust legislation made price discrimination illegal?

Group of answer choices

the Sherman Act

the Clayton Act

the Federal Trade Commission Act

the Robinson-Patman Act

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3The Sherman Act of 1890 was passed with the intent of

Group of answer choices

establishing the Federal Trade Commission (FTC) to deal with "unfair methods of competition."

preventing monopolization and/or conspiracy in the restraint of trade.

spelling out the conditions under which mergers would be considered anti-competitive.

dealing with false and deceptive advertising.

declaring interlocking directorates illegal.

Answer 1

Question 1

While evaluating a merger of two firm within an industry, Justice Department ought to know whether the merger will reduce the competition in the industry or not.

In other words, Justice Department wants to know whether market power of merged firm will increase post merger or not.

For this, the Justice Department uses HHI.

The HHI indicates the degree of concentration of market power within an industry.

Thus,

Modern Justice Department guidelines evaluate mergers according to how they would change the industry's Herfindahl index.

Hence, the correct answer is the option (1) [Herfindahl index].

Question 2

Price discrimination was considered to be an unfair trade practice.

Governments around the world has made the price discrimination illegal.

In the United States, the Clayton Act antitrust legislation made price discrimination illegal.

Hence, the correct answer is the option (2). [the Clayton Act]

Question 3

The Sherman Act of 1890 was the first antitrust legislation of the United States.

This Act was passed to prevent the monopoly power in the business and to eliminate trade practices that leads to restraining of trade and free competition.

Hence, the correct answer is the option (2) [preventing monopolization and/or conspiracy in the restraint of trade].