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Assignment the Sherman and Clayton Acts

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Assignment   The Sherman and Clayton Acts

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1. The Sherman and Clayton Acts
The Clayton Act of 1914 classifies several business practices as illegal, including price discrimination and tying contracts, if they "substantially lessen competition or tend to create a monopoly."
The Clayton Act of 1914 is an example of which of the following?
Antitrust laws
Price regulations

2. The Clayton and Celler-Kefauver Acts
Which of the following activities are prohibited by the Clayton Act when they lead to less competition?
A buyer is forced to buy multiple products from a producer in order to get a desired product.
Each of these answers is correct.
A director from one business sits on the board of a competing firm.
A firm acquires a major percentage of the stocks of a competing firm.

3. The Herfindahl index
Suppose that three firms make up the entire wig manufacturing industry. One has a 40% market share, and the other two have a 30% market share each.
The Herfindahl index of this industry is _________ (a.10,000 b.6,000 c.3,400 d.4,000 e.3,000).
A new firm, Mane Attraction, enters the wig manufacturing industry and immediately captures a 15% share of the market. This would cause the Herfindahl index for the industry to ___________ (a.fall b.rise c.remain the same).
The largest possible value of the Herfindahl index is 10,000 because:
An industry with an index higher than 10,000 is automatically regulated by the Justice Department
An index of 10,000 corresponds to a monopoly firm with 100% market share
An index of 10,000 corresponds to 100 firms with a 1% market share each

4. 90-60-30, Herfindahl, and the FTC
Suppose that in the market for soft drinks, market share is divided among six companies in the following manner:
Firm Market Share
Coca-Cola 90%
Pepsi-Cola 3%
Cadbury 2%
Cott 2%
National Beverage 2%
Royal Crown 1%
Based on the Herfindahl index...


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