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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Describe the ways policymakers can respond to the inefficiencies caused by monopolies. List a potential problem with each of these policy responses.

To determine
The reason for the existence of monopoly in the market.

Explanation

The four ways by which the policy-makers can effectively respond to the inefficiencies caused by monopolies are as follows: first is introducing more competition in monopolized industries; second is by controlling the abusive activity of the monopolies; third is by converting private monopolies into public enterprises; and the fourth is adopting laissez-faire policy. Anti-trust laws proscribe the mergers of large companies which risk the market to become more inefficient and less competitive...

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