Question

Suppose the two largest US manufacturers of athletic shoes and clothing want to merge. The government agency that

oversees mergers determines that the merger will result in a monopoly. Which action might the government agency

take in order to allow the merger but prevent a monopoly?

A)

regulate the company so its prices are fair

B)

forbid the company from selling items online

C)

force the company to sell off some of its product lines

D)

encourage competition by subsidizing other companies


Please help me with this

Answer 1

Answer: A. regulate the company so its prices are fair

Step-by-step explanation:

A monopoly is simply when there's a single seller for q particular product and the seller faces no competition and therefore is regarded as a price maker as he can sell the goods at any price he or she wants.

The action that should be taken by the government to prevent a monopoly is to regulate the company so its prices are fair. This will help the government to prevent the company from not overpricing their good.

Answer 2

A)

regulate the company so its prices are fair

Step-by-step explanation:

Anti trust laws are used to limit the extent to which dominant players in an industry monopolize it for profit.

The aim is to regulate the conduct of businesses and promote competition.

One way this is achieved is by prohibition of price-fixing and operation of cartels that tend to control the market.

In the given example above two largest US manufacturers of athletic shoes and clothing want to merge.

The government can regulate their prices to make sure that they are fair. Market entry will not be difficult for new firms that want to enter the industry, and this will promote competition.