Chapter 9, Problem 18AA

To determine

To state: The two methods used by the government to keep business competitive.

Answer to Problem 18AA

Antitrust legislation and deregulation are the two methods that are used by the government to keep business competitive.

Explanation of Solution

The two methods used by the government to keep business competitive includes anti trust legislation and deregulation.

The main aim of anti trust legislation was to maintain fair competition in the market. Such laws are applied to a number of anti-business activities like monopolies, price fixing, bid rigging etc. If these laws didn’t exist, consumers would have to face unfair competition in the market like higher price for products and services etc.

Deregulation is considered a good thing most of the two times because entry barriers are reduced a certain point thereby allowing new companies and innovations to enter the market which in turn helps in providing customers with a wide range of alternatives to choose with. It helps in increasing investment opportunities leading to a better economic growth.

Economics Concept Introduction

Introduction: Antitrust legislation are the laws that are developed by U.S. government with a view to shield the consumers from anti-competitive business practices whereas deregulation is the process of removing government regulations from a particular product or service.