**Hypothetical Monopoly Firms and Antitrust Law****Question:**Which of the following hypothetical monopoly firms is least likely to be broken up under anti-trust law?**Options:**1. **Option A:** A large agribusiness which buys up large amounts of farmland which it then does not farm. 2. **Option B:** A grocery store that has convinced local banks not to issue loans to other grocery stores that attempt to open nearby. 3. **Option C:** An automotive manufacturer that aggressively undercuts the prices of its competitors' cars until they are driven out of business. 4. **Option D:** A restaurant that formerly had a single competitor, which went out of business because there were not enough customers for both firms to turn a profit. 5. **Option E:** A manufacturing firm that earns profit by raising its prices significantly higher than they would be in a competitive market, but takes no steps to bar new firms from competing with it.**Explanation:**The question is designed to illustrate concepts related to anti-trust laws, which are intended to promote competition and prevent monopolies and unfair business practices that stifle competition.- **Option A** involves a large agribusiness that buys farmland but doesn't use it, possibly suggesting land hoarding or preventing competition in the agricultural market.- **Option B** involves a grocery store exercising control over financing options to prevent competitors from entering the market—an action that could be seen as anti-competitive.- **Option C** entails an automotive manufacturer engaging in predatory pricing, undercutting prices to drive competitors out of business, a practice typically scrutinized under anti-trust laws.- **Option D** represents a natural monopoly situation where the competitor went out of business due to market conditions and lack of customers, not necessarily due to unfair practices.- **Option E** describes a firm that elevates prices but does not take active steps to prevent competition, suggesting that market entry for others is still possible which is less likely to trigger anti-trust intervention.**Conclusion:**From these scenarios, firms like the one described in **Option D** are least likely to be broken up under anti-trust law because the competitor exited the market as a result of natural market forces, not directly due to unfair or anti-competitive practices by the remaining firm.

A monopoly is a market structure where there are only one seller and many buyers. The seller has…

Which of the following hypothetical monopoly firms is least likely to be broken up under anti-trust law? A large agribusiness which buys up large amounts of farmland which it then does not farm. A grocery store that has convinced local banks not to issue loans to other grocery stores that attempt to open nearby. An automotive manufacturer that aggressively undercuts the prices of its competitors' cars until they are driven out of business. A restaurant that formerly had a single competitor, which went out of business because there were not enough customers for both firms to turn a profit. A manufacturing firm that earns profit by raising its prices significantly higher than they would be in a competitive market, but takes no steps to bar new firms from competing with it.

Which of the following hypothetical monopoly firms is least likely to be broken up under anti-trust law? A large agribusiness which buys up large amounts of farmland which it then does not farm. A grocery store that has convinced local banks not to issue loans to other grocery stores that attempt to open nearby. An automotive manufacturer that aggressively undercuts the prices of its competitors' cars until they are driven out of business. A restaurant that formerly had a single competitor, which went out of business because there were not enough customers for both firms to turn a profit. A manufacturing firm that earns profit by raising its prices significantly higher than they would be in a competitive market, but takes no steps to bar new firms from competing with it.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter15: Economic Regulation And Antitrust Policy

Section: Chapter Questions

Problem 10PAE

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