If Penn Hills Mfg

question 300

Multiple Choice

If Penn Hills Mfg.Corp.gives the Johnstown Distributing Co.the exclusive right to distribute Penn Hills' products in Ohio,with the understanding that Johnstown can't sell Penn Hills' products outside Ohio or to other wholesalers in Ohio,the arrangement

• A)would be illegal,because the courts have ruled that all vertical arrangements between producers and intermediaries are illegal.
• B)might or might not be considered legal.The courts would weigh the possible good effects of this vertical arrangement against possible restrictions on competition.
• C)would be legal,because the courts have ruled that all vertical arrangements between producers and intermediaries are legal.
• D)would be illegal,because the courts have ruled that all horizontal arrangements between competitors are illegal.
• E)would be legal,because the courts have ruled that all horizontal arrangements between competitors are legal.

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Definitions:

Unregulated Market

A market where economic activities are not controlled by government policies or restrictions.

Imperfect Information

A market condition where all parties do not have equal access to all relevant information, leading to inefficiencies.

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

Imperfect Information

A situation in which all parties in a transaction do not have the same information, leading to inefficiencies in markets.