Ch. 7 Test - Legal Issues for Business Owners

Why is it important for business owners to know about legal issues?

• To understand tax regulations

• To protect their intellectual property

• To create a business plan

• To hire employees

How can laws promote competition?

• By providing tax exemptions

• By enforcing health and safety standards

• By preventing monopolies

• By offering subsidies

What regulations are in place to protect consumers?

• Intellectual property laws

• Environmental laws

• Consumer protection laws

• Employment laws

When and how should a business owner seek legal advice?

• When creating a marketing strategy

• When dealing with human resources issues

• When facing a legal issue or to prevent one

• When conducting an internal audit

Which levels of government regulate competition in business?

• Federal government only

• State government only

• Local government only

• Federal, state, and local governments

What was the purpose of antitrust laws according to the Anti-Trust Legislation?

• To promote free trade agreements

• To encourage monopolistic practices

• To ban business activities that do not promote competition

• To increase taxes on large corporations

What does the Sherman Act prohibit?

• Businesses from requiring customers to buy exclusively from them

• Competitors from getting together and setting prices on their products/services

• Customers from buying only the products or services they want

• Businesses from selling products below cost to eliminate competition

According to the Clayton Act, what is illegal for a business to do?

• Competitors setting prices together

• A business requiring a customer to buy exclusively from it

• Customers choosing where to buy their products

• Selling products at a competitive market price

Under the Robinson-Patman Act, it is illegal for manufacturers to:

• Offer discounts to all customers equally

• Charge different prices to similar customers

• Provide warranties for their products

• Engage in competitive advertising

The Robinson-Patman Act does NOT apply to retail stores when:

• They offer discounts based on customer loyalty programs

• They provide discounts to clear out seasonal merchandise

• They target certain groups with special promotions, such as giving discounts to senior citizens

• They have a monopoly in the market