10. Describe the characteristic features of the pool, the trust and the holding company.
11. Describe any agreement of which you know, made between merchants or manufacturers for the purpose of regulating prices. Did prices go up or down as a result?
12. What is a simple price agreement? How does it differ from a pool? Is there any difference in the matter of legality? Reasons.
13. What are the limits to the price-fixing and profit-earning powers of monopolies? Are there any other conditions which will tend to check the indefinite growth of combinations?
14. Explain and illustrate by a concrete example the circumstances relating to cost of production which tend to make a monopoly price lower than the previous competitive price for the same article. No reference is here intended to local or temporary cuts in price by monopolies which are intent by such means on capturing a local market.
15. If all trade is exchange, do not the members of a trust reduce their income when they raise the price of their products by artificial agreement?
16. Five plants engaged in the production of a given article in different parts of the United States are combined under the ownership of a single corporation formed for this purpose. Before the combination [these five plants produced 75 per cent.] of the total output of the article in question, each producing approximately 15 per cent.; the remaining 75 per cent. was produced by seven plants, no one of these turning out more than 5 per cent. of the total output. Each of the first five plants was large enough to secure all known economies in the costs of transforming the raw material into the physically finished product, and each was running to its full capacity. The aggregate net earnings of the five plants were $1,000,000 a year. The cost of reproducing these five is $14,000,000. The new corporation issues and pays to the owners of the properties taken over $10,000,000 in 5 per cent. first mortgage bonds, $6,000,000 in cumulative preferred stock, and $8,000,000 in common stock.
What will determine whether this combination possesses monopoly power?
Is the corporation overcapitalized? If so, to what extent? State clearly what you mean by overcapitalization?