Smyth Industries Operated as a Monopolist for the Past Several

question 15

Multiple Choice

Smyth Industries operated as a monopolist for the past several years,earning annual profits amounting to $50 million,which it could have maintained if Jones Incorporated did not enter the market.The result of this increased competition is lower prices and lower profits; Smyth Industries now earns $10 million annually.The managers of Smyth Industries are trying to devise a plan to drive Jones Incorporated out of the market so Smyth can regain its monopoly position (and profit) .One of Smyth's managers suggests pricing its product 50 percent below marginal cost for exactly one year.The estimated impact of such a move is a loss of $1 billion.Ignoring antitrust concerns,compute the present value of Smyth Industries' profits,if it could have remained a monopoly when the interest rate was 5 percent.

• A) $100 million
• B) $200 million
• C) $210 million
• D) $1.05 billion

Understand the role of physical compulsion and improper threats as forms of duress in contract law.

Understand and identify various forms of misrepresentations and their requirements for relief.

Recognize the significance of materiality in misrepresentations.

Differentiate between fraud, duress, and undue influence within contractual agreements.

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Definitions:

Gross Earnings

The total income earned by an individual or business before any deductions like taxes or expenses are subtracted.

Sales Taxes Payable

Liabilities for sales taxes collected from customers on behalf of governmental authorities, which are to be remitted to those authorities.

Cash Register

A mechanical or electronic device for registering and calculating transactions, often equipped with a cash drawer.

Sales Tax

A tax paid to a governing body for the sales of certain goods and services, usually collected by the retailer.