Final answer:
When only half of the demanded chips are available, a market regulator can intervene to set prices and quantities, potentially opting for a solution that ensures efficient resource allocation and benefits the broader social interest, such as producing where marginal cost meets demand and pricing at marginal cost.
Step-by-step explanation:
When two companies desire a certain amount of chips but only half are available, the situation can be resolved by a market regulator. Market regulators have the authority to set prices and quantities to ensure a fair and competitive marketplace. In the scenario provided, regulators may choose a pricing strategy such as the one found at Point C, where the firm is required to produce a quantity of output where marginal cost crosses the demand curve and charge a price equal to marginal cost. This would typically assure higher quantities and lower prices than a monopolistic scenario, aligning with perfect market competition and ensuring an efficient allocation of resources.
If antitrust authorities were to divide the market, a different outcome could occur, leading to competition between new, smaller firms, potentially changing production and pricing dynamics. Since division of markets and setting prices collaboratively is often illegal, the direction taken by regulators plays a crucial role in determining the distribution of resources when a shortage occurs.