📚 Learning Guide
Market Failures and Government Role
hard

How can government intervention effectively address monopolies in a free market?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

By regulating prices to ensure fairness

B

By allowing monopolies to set their own prices

C

By introducing more competition through antitrust laws

D

By providing subsidies to monopolies to lower prices

Understanding the Answer

Let's break down why this is correct

Answer

Government intervention can effectively address monopolies in a free market by creating rules and regulations that promote competition. When one company has too much control over a market, it can charge high prices and limit choices for consumers. By enforcing antitrust laws, the government can break up monopolies or prevent companies from merging in ways that would reduce competition. For example, if a big company tries to buy a smaller competitor to eliminate competition, the government can step in to stop the merger. This helps ensure that consumers have access to fair prices and various products, which is essential for a healthy economy.

Detailed Explanation

Introducing more competition helps break up monopolies. Other options are incorrect because Some think regulating prices makes things fair; Allowing monopolies to set their own prices seems easy.

Key Concepts

Market Failures
Government Intervention
Monopolies
Topic

Market Failures and Government Role

Difficulty

hard level question

Cognitive Level

understand

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