Asked by Melonie Johnson on Jun 22, 2024

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Which of the following statements is not correct?

A) The government may use antitrust laws to break up an existing company to improve competition.
B) The government may break up a natural monopoly to lower the price charged to customers.
C) Economists usually prefer private ownership to public ownership of natural monopolies.
D) Sometimes the best strategy is for the government to do nothing about monopoly inefficiency because the "fix" may be worse than the problem.

Antitrust Laws

Legislation enacted to prevent monopolies or unfair business practices that restrict free competition, thereby protecting consumers and ensuring a fair market environment.

Natural Monopoly

A type of monopoly that exists due to the high cost or complexity of operating in a specific industry, which effectively prevents other competitors.

Monopoly Inefficiency

The loss of economic efficiency that occurs when a single firm controls the market, leading to higher prices and lower product quantity or quality than in competitive markets.

  • Analyze the role and impact of antitrust laws and government regulation on monopolies and market competition.
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TS
Taylor SharpJun 26, 2024
Final Answer :
B
Explanation :
Natural monopolies exist where high infrastructure costs and other barriers to entry significantly limit competition. Economists often argue that breaking up a natural monopoly can lead to inefficiencies and higher costs due to the loss of economies of scale. Therefore, the government might regulate a natural monopoly rather than break it up to ensure fair prices and service levels, making statement B incorrect in the context of typical economic policy towards natural monopolies.