Final answer:
Businesses can lower production costs by merging with competing firms, achieving economies of scale, which often leads to less competition. Although this can result in higher consumer prices, the efficiency gains for the economy overall can be significant. Government intervention sometimes balances the need for competition with the benefits of large-scale production.
Step-by-step explanation:
One major way that businesses lowered production costs and consequently increased their competitiveness and productivity was by merging competing firms. Mergers can help a business scale up its production, lead to economies of scale, and thus reduce the average cost of production. This strategy often results in less competition in the marketplace, which can be both a boon and a bane. Less competition can lead to higher prices for consumers, but it can also mean more efficient and stronger companies that can hold their own against global competition.
Furthermore, it is important to recognize that the gains from businesses having better or cheaper products often outweigh the losses. Firms that offer superior products or lower prices can increase their profits and provide their employees with higher incomes, creating a generally favorable outcome for the nation's economy.
On the other hand, unchecked mergers can lead to a concentration of market power, which may negatively impact competition and consumer choice. Hence, governmental intervention is sometimes necessary to strike a balance between the benefits of large-scale production and the potential downsides of reduced competition.