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Market Failures and Government Role
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Arrange the steps that illustrate the government's role in correcting market failures due to monopolies.

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Learning Path
Learning Path

Question & Answer
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Review Options
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Choose the Best Answer

A

Identify the monopoly and its impact on consumers → B. Implement regulations or break up the monopoly → C. Monitor the market for compliance → D. Allow the market to self-correct without intervention

B

Implement regulations or break up the monopoly → A. Identify the monopoly and its impact on consumers → C. Monitor the market for compliance → D. Allow the market to self-correct without intervention

C

Monitor the market for compliance → B. Implement regulations or break up the monopoly → A. Identify the monopoly and its impact on consumers → D. Allow the market to self-correct without intervention

D

Allow the market to self-correct without intervention → A. Identify the monopoly and its impact on consumers → B. Implement regulations or break up the monopoly → C. Monitor the market for compliance

Understanding the Answer

Let's break down why this is correct

Answer

When a monopoly exists, it means one company controls the entire market for a product or service, which can lead to higher prices and less choice for consumers. The government steps in to correct this by first identifying the problem, such as high prices or lack of competition. Next, they might create laws to prevent monopolies from forming or to break up existing monopolies, allowing more companies to compete. For example, if one company owns all the gas stations in a town, the government could allow other businesses to open their own stations. This way, competition can lead to lower prices and better services for everyone.

Detailed Explanation

First, the government needs to find out if a company is a monopoly and how it affects people. Other options are incorrect because This option suggests acting before understanding the problem; This option starts with monitoring, which is too late.

Key Concepts

Market Failures
Government Intervention
Monopolies
Topic

Market Failures and Government Role

Difficulty

medium level question

Cognitive Level

understand

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