If Penn Hills Mfg

question 91

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,this arrangement:

• A) Would definitely be ILLEGAL because the courts have ruled that all vertical arrangements between producers and intermediaries are illegal.
• B) May or may not be LEGAL-the courts would weigh the possible good effects of this vertical arrangement against possible restrictions on competition.
• C) Would definitely be LEGAL because the courts have ruled that all vertical arrangements between producers and intermediaries are legal.
• D) Would definitely be ILLEGAL because the courts have ruled that all horizontal arrangements between competitors are illegal.
• E) Would definitely be LEGAL because the courts have ruled that all horizontal arrangements between competitors are legal.

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Definitions:

Winding-Up Process

The formal procedure of liquidating a company's assets, settling liabilities, and distributing any remaining assets to shareholders or creditors.

Capital Account

An account on a nation's balance of payments that records transactions involving the purchase and sale of assets, such as property and stocks.

Partners' Equity

The portion of equity in a partnership that belongs to each partner, reflecting their capital contributions, withdrawals, and share of earnings or losses.

Equity

The value of an owner's interest in a property or business, calculated as the difference between the assets and the liabilities.