The United States bans most efforts to create a monopoly when:
A) the potential monopoly is a natural monopoly.
B) two firms combine and become twice as large as each of the remaining 200-300 firms.
C) efforts to form a monopoly "unfairly" drive out competitors.
D) output exceeds the efficient level.

Question

Quizplus · Accepted Answer

The United States bans efforts to form a monopoly when it is done "unfairly" to drive out competitors. This is commonly referred to as anti-competitive behavior and is prohibited by antitrust laws. A natural monopoly, which arises from the nature of the market, may be allowed to exist and may even be regulated by the government to ensure fair competition. The size of the firm alone does not necessarily result in anti-competitive behavior, and output exceeding the efficient level is not a factor in determining whether a monopoly exists.

The United States Bans Most Efforts to Create a Monopoly