Question

1. The U.S. Justice Department dropped the Case against IBM in the main frame computer case because

a. the judge in the case had been bribed
b. the case had dragged on too long
c. the government was not going to prevail or win in its definition of the relevant market
d. the judge died
e. IBM was such a corrupt company that it was hard to find witnesses to testify against it

2. In 1911, two of the largest companies in the world were broken up through divestiture. Since then, divestiture as a remedy for violations of U.S. antitrust laws has been
a. very common
b. rare
c. only used when the courts issue consent decrees
d. the remedy most preferred by the courts

3.Price seekers (or searchers) can charge a higher price, but only if they are willing to
a. have higher costs
b. sell less
c. take in less revenue
d. make less profit
e. loose market status
Group of answer choices

Answer 1

1. Answer : (c) the government was not going to prevail or win in its definition of the relevant market

The US Justice Department dropped the case against IBM in the mainframe computer case as the government had very little chances for winning the case and the litigation would have costed huge loss for the government. Also, it would have dragged the case further if it was continued.

The policy changes that occurred in the Justice Department also caused a change in the approach as the antitrust division of Justice Department overturned the antitrust policies of previous administrations.

2. Answer : (d) the remedy most preferred by the courts

Divestiture is the process of selling of subsidiary companies or investments. It has been used in 1911 when the Supreme Court agreed the divestiture of Standard Oil company when it made three separate companies that competed with each other.  

Since then, divestiture has been the preferred remedy by the US courts. The court will consider the effect of a divestiture decision on the consumer welfare and competition. It has been used in atleast 52 cases from 1911 till the Justice Department abandoned it in 1990. Over the span of divestiture, the Supreme Court has considered the appropriateness of divestiture and used as a preferred method of remedy.

3. Answer : (d) make less profit

Price seekers or price searchers are those people who sells goods and services and influences their market price. There could be monopoly in their sector and as a result, they set their own prices for goods and services based on the demand and supply in the market.

In case of price searchers, they usually produce less in order to make profits. Since every buyer is charged the same price for goods and services, the profitability increase when produced less. They can't earn more profit as higher profits may attract investors.

Answer 2

Answer)

1. The U.S. Justice Department dropped the Case against IBM in the main frame computer case because

b. the case had dragged on too long

2)very common

3)sell less

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