Many economists agree that government should deal with monopolists on a case-by-case basis. Which of the following is not a government policy option?
A) If the monopoly is attained and maintained through anticompetitive behavior, the government can file a suit based on antitrust laws.
B) If the firm is a natural monopoly, the government may decide to regulate its prices and operations.
C) If the monopoly is maximizing economic profits, the government can subsidize new firms to enter the industry.
D) If the monopoly is subject, and vulnerable, to potential competition, the government can decide to leave it alone.

Question

Quizplus · Accepted Answer

The government cannot directly subsidize a firm to enter an industry as it would be considered unfair government intervention. However, the government can create policies that promote competition and entrepreneurship, such as tax incentives for small businesses or investment in research and development.

Many Economists Agree That Government Should Deal with Monopolists on a Case-By-Case