If the government breaks up a monopoly that does not practice discrimination and forces a horizontal marginal cost curve into a perfectly competitive market,_____
A)output and price will decrease.
B)output will increase and price will decrease.
C)output and price will increase.
D)output will decrease and price will increase.
E)output and price will remain unchanged.

Question

Quizplus · Accepted Answer

Breaking up a monopoly and introducing competition will increase the number of firms in the market, leading to an increase in output. The presence of multiple firms competing with each other will lead to price competition, eventually resulting in a decrease in price. Therefore, output will increase, and price will decrease.

If the Government Breaks Up a Monopoly That Does Not