Asked by Nicholas Malmquist on Jun 11, 2024
Verified
Many economists agree that government should deal with monopolists on a case-by-case basis. Which of the following is not a government policy option?
A) If the monopoly is attained and maintained through anticompetitive behavior, the government can file a suit based on antitrust laws.
B) If the firm is a natural monopoly, the government may decide to regulate its prices and operations.
C) If the monopoly is maximizing economic profits, the government can subsidize new firms to enter the industry.
D) If the monopoly is subject, and vulnerable, to potential competition, the government can decide to leave it alone.
Antitrust Laws
Legislation intended to promote competition and prevent monopolies or unfair practices that restrain trade.
- Recognize the regulatory options available to governments in dealing with monopolies and the rationale for each.
Verified Answer
AM
Alexandria MosleyJun 14, 2024
Final Answer :
C
Explanation :
Subsidizing new firms to enter an industry to compete with a monopolist is not a typical government policy for dealing with monopolies. Instead, governments usually regulate monopolies, enforce antitrust laws, or leave them alone if competition is feasible.
Learning Objectives
- Recognize the regulatory options available to governments in dealing with monopolies and the rationale for each.