[Adult Floaters] Adam and Zach Are Both Involved in Businesses

question 49

Multiple Choice

[Adult Floaters] Adam and Zach are both involved in businesses that manufacture bathing suits with small personal flotation devices implanted to assist with swimming. They both ship the suits to different states around the country. Adam and Zach get together and decide to raise their prices. They decide that since they are the only two manufacturers of this type of suit, if they both stick together and raise prices to an agreed upon amount, then consumers will be forced to pay that amount. They want to make a lot of money before anyone else jumps into the market. Adam's disgruntled secretary finds out about the agreement and sends out letters to consumers revealing the agreement.
-In attempting to establish a violation of the Sherman Act, what type of trade violation would the government most likely allege?

• A) A vertical restraint
• B) A horizontal restraint
• C) A corresponding restriction
• D) An agreed restriction
• E) A rule-of-reason restriction

---

Definitions:

Markup Percent

The fraction of the cost price of items increased to cover operational expenses and secure profit.

Cost

The amount of money required to purchase goods or services or the expenditure incurred in the production of goods.

Markup Percent

The rate applied on top of the buying price of goods to encompass overhead expenses and earn profit.

Cost

The amount of money or resources expended to acquire an asset, produce a product, or provide a service.