Question

How do monopolies threaten capitalism (thus incentivizing governments to restrict monopolies even in an otherwise capitalist system)?

a. by mistreating employees
b. by undercutting the government
c. by having too much political power
d. by eliminating competition

Answer 1

Monopolies threaten capitalism by eliminating competition, having too much political power, and undercutting the government.

Step-by-step explanation:

Monopolies threaten capitalism in several ways, which is why governments often restrict them in an otherwise capitalist system. One way monopolies threaten capitalism is by eliminating competition. When a single company controls a market, it can dictate prices and stifle innovation. This can lead to higher prices for consumers and less incentive for other companies to enter the market.

Additionally, monopolies can have too much political power. They can use their influence and resources to shape policies and regulations in their favor, creating an unfair advantage over competitors. This undermines the principles of a free and competitive market.

Furthermore, monopolies can undercut the government by avoiding taxes or engaging in other practices that harm the economy. This can lead to decreased government revenue and hinder economic growth.