Chapter 9, Problem 2AA

To determine

To analyze: The ways by which government tries to regulate unfair business practices.

Answer to Problem 2AA

Regulations are significant as they provide a set of direction and instructions to the businesses to perform. It structures the operations of the business.

Explanation of Solution

Regulations are significant as they provide a set of direction and instructions to the businesses to perform. It structures the operations of the business. Had regulations not been imposed on the businesses, many companies can indulge themselves in unethical practices.

Antitrust legislation are the laws that are developed by U.S. federal government with a view to safeguard the consumers from anti-competitive business practices. The main aim of such laws so as 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.

Mergers are significant because that helps the acquiring firm in increasing their market share and also offers a potential growth for their business. It also reduces unnecessary competition in the market where small corporations are merged into large ones offering them more profitable opportunities.

Conglomerate is a type of merger which happens amongst firms that are engaged in completely different businesses.

Deregulation is the process of reducing or removing regulations and control over a particular industry or business.

Most of the times, deregulation is considered a good thing 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 vast number of alternatives to choose from. It helps in increasing investment opportunities leading to a better economic growth.

Economics Concept Introduction

Introduction: Regulations are the set of rules that are imposed on businesses.

Deregulation is the process of removing government regulations from a particular product or service.