Fact Pattern 20-1 MicroManage Is the Fastest Growing Home-Software Producer in the Country

question 140

Multiple Choice

Fact Pattern 20-1
MicroManage is the fastest growing home-software producer in the country. In 2000, it sold 6% of all home software in the U.S., but in 2011, it sold 55% of all home software. A recent issue of Computer Universe said that MicroManage was "the most dominant and aggressive of all home-software developers." Home software is a small part of the entire software industry.
In 2011, MicroManage proposed a merger with Game Master, its main rival. Game Master was responsible for 10% of all home-software sales in 2010. MicroManage's president says that the combination of the firms will allow MicroManage to lower costs and pass the savings on to its customers.
The Department of Justice filed suit to stop this merger, claiming the combination would give monopoly power to the merged firm. Justice insists that consumers would lose in the end.
-Refer to Fact Pattern 20-1. Assume that a merger does take place. Which legal standard will a court apply that reviews the merger?

• A) a rule of reason analysis
• B) a per se analysis
• C) an indirect damages analysis
• D) a rule of reason analysis and an indirect damages analysis
• E) none of the other choices

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Definitions:

Marginal Cost

The increase in cost that arises from producing one additional unit of a good or service.

Output

The quantity of goods or services produced in a given time period by a firm, industry, or country.

Fixed Costs

Costs that do not change with the level of output or production, such as rent, salaries, or loan payments.

Variable Costs

Costs that change in proportion to the amount of goods or services produced.