Fact Pattern 16-2 Number One Oil Company Sells Gas to Various Gas Stations

question 4

Multiple Choice

Fact Pattern 16-2
Number One Oil Company sells gas to various gas stations. Number One requires that the gas stations agree that they will not sell gas above a certain maximum price set by Number One. Some of the gas stations are unhappy with the arrangement because they wish to sell gas at any price they choose. Unfortunately for them, other oil companies in the region also impose maximum price restrictions. The station owners begin investigating whether any antitrust violation could be involved.
-Refer to fact pattern 16-2. Which of the following is true regarding whether the imposition of maximum prices under the facts presented would be an antitrust violation?

• A) The U.S. Supreme Court has ruled that such restrictions do not violate federal antitrust law.
• B) The imposition of maximum pricing restrictions is per se illegal under federal antitrust law.
• C) A rule of reason approach is used in determining whether the imposition of maximum prices is illegal under federal antitrust law.
• D) A presumption of reasonableness approach is used in determining whether the imposition of maximum prices is illegal under federal antitrust law.

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Definitions:

Incremental Sales

The addition to total sales generated by a specific business activity or decision, beyond what would have otherwise been achieved.

Income Tax Expense

The cost charged against earnings from operations and other activities, representing the amount of income taxes owed to governmental authorities.

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and operational efficiency.

After-Tax Discount

A reduction in the price of an item or service that is applied after calculating taxes.