BADM 300 EXAM 3 QUESTIONS &
SOLUTIONS
Administrative agencies are part of which branch of government?
a.Judicial branch
b.Executive branch
c.Legislative branch
d.Administrative branch - ANSWERb.Executive branch
Where do administrative agencies get their authority?
a.U.S. Constitution
b.Title VII of the Civil Rights Act
c.Enabling legislation
d.U.S. Supreme Court - ANSWERc.Enabling legislation
U.S. Customs and Border Protection (CBP) is a federal law enforcement agency
housed within the U.S. Department of Labor. The president appoints the commissioner
of the CBP and can remove them at will. What type of agency is the CBP?
a.Independent
b.Executive
c.Hybrid
d.Intelligence - ANSWERb.Executive
The Securities and Exchange Commission (SEC) is a federal agency that is led by a
bipartisan commission made up of five commissioners. The president appoints the
commissioners, and each serves a 5-year term and cannot be removed by the
president. What type of agency is the SEC?
a.Independent
b.Executive
c.Hybrid
d.Insurance - ANSWERa.Independent
For years, Exceed Roofing and Roofs by Ryan have competed with each other's prices
for roofing services (they charge by the sq. ft. of roof). Not wanting to reduce its prices
anymore, Exceed Roofing visits Roofs by Ryan and suggests that they enter into an
agreement that neither company will charge any less than $5/sq. ft. for roofing services
so that they don't have to continue dropping their prices to compete.This agreement is
an example of which of the following?
a.Predatory pricing
,b.Resale price maintenance
c.Price discrimination
d.Price fixing - ANSWERd.Price fixing
Home Depot, Menard's, and Lowe's all carry DeWalt products, and all three companies
think that DeWalt's products are overpriced, which makes it hard to achieve good
margins on them. Rather than completely dropping DeWalt products from their product
lines, they get together and agree to stop buying DeWalt products until DeWalt agrees
to lower their prices. What is this an example of?
a.Bid rigging
b.Group boycott
c.Territory restriction
d.Tying arrangement - ANSWERb.Group boycott
Which of the following would be the most likely to be scrutinized by the Federal Trade
Commission as a potential violation of antitrust laws?
a.A merger between McDonald's and the potato company where they buy potatoes for
their fries (vertical merger)
b.A merger between McDonald's and Wendy's (horizontal merger)
c.A merger between Papa Del's pizza restaurant, which is native to Champaign County,
and a local pizza restaurant in Peoria, IL (market extension merger)
d.A merger between McDonald's and Nike (conglomerate merger) - ANSWERb.A
merger between McDonald's and Wendy's (horizontal merger)
If an administrative agency is independent of any department in the executive branch
and is run by a non-partisan board, the members of which are appointed by the
President of the United States but cannot be removed by the President, which of the
following types of agencies is it?
a.Independent agency
b.Executive agency
c.Hybrid agency
d.Insurance agency - ANSWERa.Independent agency
If an administrative agency is housed within a department of the executive branch and
is run by a commissioner that is appointed by the President of the United States and
can be removed at will by the President, which of the following types of agencies is it?
a.Executive agency
b.Independent agency
c.Hybrid agency
d.Intelligence agency - ANSWERa.Executive agency
, Which THREE of the following are functions of administrative agencies? [NOTE THAT
THERE ARE THREE CORRECT ANSWERS TO THIS QUESTION; MARK ALL THAT
APPLY.]
a.Make rules that implement legislation (e.g.rules that implement the Occupational
Safety & Health Act)
b.Investigate potential violations of the agency's rules
c.Enforce violations of the agency's rules
d.Review the actions of the President of the United States for potential violations of the
U.S. Constitution - ANSWERa.Make rules that implement legislation (e.g.rules that
implement the Occupational Safety & Health Act)
b.Investigate potential violations of the agency's rules
c.Enforce violations of the agency's rules
Administrative agencies are part of which branch of the federal government?
a.Executive branch
b.Legislative branch
c.Judicial branch
d.Administrative branch - ANSWERa.Executive branch
Verizon leases space on cell towers in Champaign County to provide 5G cellular service
for the area. Because these leases are so expensive and the Champaign market is
relatively small, there is only room for one competitor for 5G cellular service in
Champaign County, and no other cell providers (At&T, T-Mobile, etc.) have entered the
market. Is Verizon's 5G service an illegal monopoly?
a.No because Verizon has a natural monopoly in the Champaign area
b.No because Verizon is so good at what it does that it has an innocent monopoly in the
Champaign area
c.Yes because it has 100% of the market share in the Champaign area
d.Yes because leasing the cell-tower space was a willful act of monopolization -
ANSWERa.No because Verizon has a natural monopoly in the Champaign area
Mitchell enters Potbelly Sandwich Shop on Green Street wearing an Illini baseball cap.
He buys a sandwich for $6.99. Ten minutes later, another customer walks in wearing a
University of Kansas baseball cap and orders the same type of sandwich that Mitchell
ordered. The owner of this Potbelly location is working at the cash register and does not
like the University of Kansas. She decides to charge that customer $7.50. Is this illegal
price discrimination?
a.Yes because Mitchell and the customer are similarly situated but were charged
different prices for the same product
b.No because sandwiches are perishable, and the change in price was due to changing
conditions
c.No because Potbelly is free to charge whatever price it wants
SOLUTIONS
Administrative agencies are part of which branch of government?
a.Judicial branch
b.Executive branch
c.Legislative branch
d.Administrative branch - ANSWERb.Executive branch
Where do administrative agencies get their authority?
a.U.S. Constitution
b.Title VII of the Civil Rights Act
c.Enabling legislation
d.U.S. Supreme Court - ANSWERc.Enabling legislation
U.S. Customs and Border Protection (CBP) is a federal law enforcement agency
housed within the U.S. Department of Labor. The president appoints the commissioner
of the CBP and can remove them at will. What type of agency is the CBP?
a.Independent
b.Executive
c.Hybrid
d.Intelligence - ANSWERb.Executive
The Securities and Exchange Commission (SEC) is a federal agency that is led by a
bipartisan commission made up of five commissioners. The president appoints the
commissioners, and each serves a 5-year term and cannot be removed by the
president. What type of agency is the SEC?
a.Independent
b.Executive
c.Hybrid
d.Insurance - ANSWERa.Independent
For years, Exceed Roofing and Roofs by Ryan have competed with each other's prices
for roofing services (they charge by the sq. ft. of roof). Not wanting to reduce its prices
anymore, Exceed Roofing visits Roofs by Ryan and suggests that they enter into an
agreement that neither company will charge any less than $5/sq. ft. for roofing services
so that they don't have to continue dropping their prices to compete.This agreement is
an example of which of the following?
a.Predatory pricing
,b.Resale price maintenance
c.Price discrimination
d.Price fixing - ANSWERd.Price fixing
Home Depot, Menard's, and Lowe's all carry DeWalt products, and all three companies
think that DeWalt's products are overpriced, which makes it hard to achieve good
margins on them. Rather than completely dropping DeWalt products from their product
lines, they get together and agree to stop buying DeWalt products until DeWalt agrees
to lower their prices. What is this an example of?
a.Bid rigging
b.Group boycott
c.Territory restriction
d.Tying arrangement - ANSWERb.Group boycott
Which of the following would be the most likely to be scrutinized by the Federal Trade
Commission as a potential violation of antitrust laws?
a.A merger between McDonald's and the potato company where they buy potatoes for
their fries (vertical merger)
b.A merger between McDonald's and Wendy's (horizontal merger)
c.A merger between Papa Del's pizza restaurant, which is native to Champaign County,
and a local pizza restaurant in Peoria, IL (market extension merger)
d.A merger between McDonald's and Nike (conglomerate merger) - ANSWERb.A
merger between McDonald's and Wendy's (horizontal merger)
If an administrative agency is independent of any department in the executive branch
and is run by a non-partisan board, the members of which are appointed by the
President of the United States but cannot be removed by the President, which of the
following types of agencies is it?
a.Independent agency
b.Executive agency
c.Hybrid agency
d.Insurance agency - ANSWERa.Independent agency
If an administrative agency is housed within a department of the executive branch and
is run by a commissioner that is appointed by the President of the United States and
can be removed at will by the President, which of the following types of agencies is it?
a.Executive agency
b.Independent agency
c.Hybrid agency
d.Intelligence agency - ANSWERa.Executive agency
, Which THREE of the following are functions of administrative agencies? [NOTE THAT
THERE ARE THREE CORRECT ANSWERS TO THIS QUESTION; MARK ALL THAT
APPLY.]
a.Make rules that implement legislation (e.g.rules that implement the Occupational
Safety & Health Act)
b.Investigate potential violations of the agency's rules
c.Enforce violations of the agency's rules
d.Review the actions of the President of the United States for potential violations of the
U.S. Constitution - ANSWERa.Make rules that implement legislation (e.g.rules that
implement the Occupational Safety & Health Act)
b.Investigate potential violations of the agency's rules
c.Enforce violations of the agency's rules
Administrative agencies are part of which branch of the federal government?
a.Executive branch
b.Legislative branch
c.Judicial branch
d.Administrative branch - ANSWERa.Executive branch
Verizon leases space on cell towers in Champaign County to provide 5G cellular service
for the area. Because these leases are so expensive and the Champaign market is
relatively small, there is only room for one competitor for 5G cellular service in
Champaign County, and no other cell providers (At&T, T-Mobile, etc.) have entered the
market. Is Verizon's 5G service an illegal monopoly?
a.No because Verizon has a natural monopoly in the Champaign area
b.No because Verizon is so good at what it does that it has an innocent monopoly in the
Champaign area
c.Yes because it has 100% of the market share in the Champaign area
d.Yes because leasing the cell-tower space was a willful act of monopolization -
ANSWERa.No because Verizon has a natural monopoly in the Champaign area
Mitchell enters Potbelly Sandwich Shop on Green Street wearing an Illini baseball cap.
He buys a sandwich for $6.99. Ten minutes later, another customer walks in wearing a
University of Kansas baseball cap and orders the same type of sandwich that Mitchell
ordered. The owner of this Potbelly location is working at the cash register and does not
like the University of Kansas. She decides to charge that customer $7.50. Is this illegal
price discrimination?
a.Yes because Mitchell and the customer are similarly situated but were charged
different prices for the same product
b.No because sandwiches are perishable, and the change in price was due to changing
conditions
c.No because Potbelly is free to charge whatever price it wants
