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

question 22

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 best describes the situation by which Number One Oil Company and other companies impose maximum price restrictions?

• A) Horizontal price-fixing
• B) Vertical price-fixing
• C) Adverse price-fixing
• D) There is no antitrust term for the practice.

---

Definitions:

Transfer Prices

Prices used for the sale of goods or services between departments or subsidiaries within the same company, often set to comply with tax laws.

Multinational Company

A corporation that operates in multiple countries beyond its home country, typically having a centralized headquarters but decentralized operations.

Tax Rates

The fraction of earnings taken as tax from a person or corporation by the authorities.

Fixed Overhead Costs

Costs that do not change in total with changes in the volume of production or services.