Final answer:
The term for a large company that poses a free market threat as a buyer is monopsony. Such companies wield significant power over suppliers, which can reduce market competition and may require government intervention to maintain a balance in the market.
Step-by-step explanation:
The term that describes how some companies become so large as buyers of goods that they could pose a threat to the free market is monopsony. Unlike monopoly, where a single entity dominates the selling side of the market, a monopsony occurs when there is only one major buyer, giving the company substantial power to dictate terms to suppliers. This can both distort the market and reduce competition.
Large corporations, like monopoly sellers, may feel invulnerable due to their position and possibly overlook other competitive possibilities due to the market power they wield. Government policymakers must continually assess when it is necessary to intervene to ensure that the balance between large-scale production, which can lower costs, and the potential reduction in competition, usually from mergers, is maintained in the interests of consumers.