One way for a government to try to eliminate monopolies within society is to:

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Here is the question restated: One way for a government to try to eliminate monopolies within society is to:
Option 1: Impose a price ceiling to reduce economic profit. This approach targets the monopoly's ability to set high prices by legally capping the price, which typically lowers the monopoly’s profits and can encourage competition or at least reduce excess profits.
Option 2: Impose a price ceiling to increase economic profit. A price ceiling generally lowers prices, not increases profits for a dominant seller; in most monopoly situations it would squeeze profits rather than enlarge them, making this option unlikely.
Option 3: Impose a price floor to reduce economic profit. A price floor would set a minimum price above equilibrium in some scenarios, but for a monopoly, raising the price floor could actually maintain or increase profits rather than reduce them, and it may not address competition directly.
Option 4: Impose a price floor to increase economic profit. While a price floor can raise prices in certain markets, for a monopolist this would not necessarily eliminate monopoly conditions and could simply embed higher profits or lead to inefficiencies, and it does not target competition in the way price controls aimed at reducing monopoly power would.

In this context, the most effective government tool described to curb monopoly profitability and potentially encourage competition is a price ceiling that limits the monopoly’s ability to extract surplus. The other options either mischaracterize the typical economic impact of price floors or misstate the direction of profit changes induced by price ceilings in a monopoly setting.

ECO101H1 S LEC0101 topic quiz: monopoly

One way for a government to try to eliminate monopolies within society is to:

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ECO101H1 S LEC0101 topic quiz: monopoly

One way for a government to try to eliminate monopolies within society is to:

View Explanation

Log in for full answers

Similar Questions

In this market, there will be [ Select ] excess demand excess supply of [ Select ] 41 0 39 80 121 . Ironically, the amount of natural gas used with the price ceiling will be [ Select ] less than more than the natural gas used if the price was allowed to rise to the market level.

Use the figure below to answer the following question. If a price floor in this market is set at , then deadweight loss equals area

How has government intervention in the gasoline market affected market participants?

Suppose the government imposes a price floor in a perfectly competitive market, assuming that the laws of demand and supply hold. Then, the more elastic -in the market equilibrium - the market supply is, the smaller the deadweight loss will be.

Which of the following would increase quantity supplied, increase quantity demanded, and decrease the price that consumers pay?

In a market with a binding price ceiling, an increase in the ceiling will ________ the quantity supplied, ________ the quantity demanded, and reduce the ________.

MC Qu. 62 A government-set price floor on a... A government-set price floor on a product BlackTom Analysis

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In a market with a binding price ceiling, an increase in the ceiling will the quantity supplied, the quantity demanded, and reduce the .