Introductory Business Law CLEP Prep Practice Exam

What is an unfair trade practice?

1. An illegal practice that is generally used in the marketplace

2. An illegal practice that is used to manipulate the economy

3. An illegal practice that harms consumers

4. An illegal practice that gives one company an unfair advantage over its competitors

The correct answer is: An illegal practice that gives one company an unfair advantage over its competitors

An unfair trade practice is described as any practice in business that is deemed to be unethical and contrary to fairness and good faith. This includes actions such as false advertising, price manipulation, and infringement of intellectual property. It is not simply an illegal practice, but specifically one that gives one company an unfair advantage over others. Options A, B, and C are not specific enough and do not highlight the particular aspect of an unfair trade practice that involves an unfair advantage over competitors.