ETH/321
Week 4 Chapter Questions

Chapter 15

1. Under the regulation of interstate commerce:

___A. the states have the exclusive power to regulate commerce that passes across their lines.

___B. activities affecting interstate commerce do not come under the power of the federal government.

___C. regulation on any activity is appropriate if it aids interstate commerce.

___D. intrastate activities affecting interstate commerce can be regulated only by the state governments.

___E. the Congress cannot regulate a local activity.

2. By requiring state legislation and regulation to protect the public's health, safety, morals, and general welfare, _____ give(s) state governments expansive power to regulate business activities.

___A. eminent domain

___B. Presidential authority

___C. commerce clause

___D. police powers

___E. federal authority

3. Administering laws to prohibit distribution of adulterated, misbranded, or unsafe food and drugs is a function of the _____.

___A. FCC

___B. FTC

___C. FRB

___D. FDA

___E. FAA

4. Business often fails to regulate itself, and the lack of self-regulation is contrary to the public interest. To counterbalance, administrative agencies exist to:

___A. refer the problem or area to experts for solution and management.

___B. protect the public, especially from the business community.

___C. replace competition with regulation.

___D. develop detailed rules and regulations to carry out the legislative policy.

___E. provide services, having been arisen out of necessity.

5. Which of the following functions allows an agency to gather and compile information concerning the organization and business practices of any corporation or industry engaged in commerce to determine whether there has been a violation of any law?

___A. adjudicating

___B. advising

___C. rule making

___D. investigating

___E. determining

Chapter 16

6. For a seller's pricing to be considered predatory conduct, there must be proof that:

___A. the seller was selling the product at a price below the cost price.

___B. the prices were intended to drive competitors out of business followed by the wrongdoer recouping these initial losses.

___C. the prices were significantly lower than those of all competitors within the same product group.

___D. the buyers were unwilling to buy the product at the seller's prices, and only bought the product from a lack of choice.

___E. the buyer had other options in the same product line available in different price ranges.

7.The _____ holds that contracts or conspiracies in restraint of trade are illegal only if they constituted undue or unreasonable restraints of trade and that only unreasonable attempts to monopolize are covered by the Sherman Act.

___A. rule of per se illegality

___B. Parker v. Brown doctrine

___C. rule of reason

___D. duty-to-deal doctrine

___E. Ker-Frisbie doctrine

8. Attempts by manufacturers to control retail prices are known as _____ price fixing.

___A. transfer

___B. vertical

___C. lateral

___D. congestion

___E. rational

9. When a product is sold only on condition that the buyer also purchases a second different product from the seller, the transaction is called a/an:

___A. executory contract.

___B. exclusive dealing contract.

___C. reciprocal dealing agreement.

___D. tying agreement.

___E. licensing agreement.

10. A merger in which the companies neither compete nor are related as a customer or supplier is called a:

___A. product market extension merger.

___B. vertical merger.

___C. horizontal merger.

___D. conglomerate merger.

___E. geographic market extension merger.

Chapter 17

11. The _____ regulates transfers of securities after the initial sale.

___A. Securities Exchange Act of 1934

___B. Sherman Antitrust Act of 1890

___C. Sarbanes-Oxley Act of 2002

___D. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

___E. Securities Act of 1933

12. An insider is any person who owns more than _____ percent of any security.

___A. 5

___B. 10

___C. 15

___D. 20

___E. 50

13. According to the Sarbanes-Oxley Act, the accuracy of the company's financial records is certified by the:

___A. CEO and COO.

___B. COO and CFO.

___C. CEO and CFO.

___D. CEO and CIO.

___E. CFO and CIO.

14.Sarbanes-Oxley provides that whenever there is a restatement of the company's financial condition, then the executives:

___A. would be morally rather than legally culpable for the bonuses paid as a result of the incorrect financial statements.

___B. have to forfeit their salaries to cover for the amount of the bonuses paid to them on the basis of incorrect financial statements.

___C. would not be legally bound to return any bonuses paid as a result of the incorrect financial statements.

___D. must return any bonuses paid as a result of the incorrect financial statements along with the interest.

___E. must return any bonuses paid as a result of the incorrect financial statements.

15.The Financial Stability Oversight Council was established by the:

___A. Securities Exchange Act of 1934.

___B. Sherman Antitrust Act of 1890.

___C. Sarbanes-Oxley Act of 2002.

___D. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

___E. Securities Act of 1933.