- Question 1: In the government ruining against Standard Oil in the early 1900s, congress recognized the need
A. For the public to have access to natural resources.
B. For price controls in a command economy.
C. To protect competition in a mixed economy.
D. To protect the common good in a market economy.
The correct answer is D. To protect the common good in a market economy.
Indeed, the Supreme Court ruled that the practices of Standard Oil were monopolistic and although they had been considered legal under common law, their methods and consequences were the prices for the consumer increased, the production of oil decreased and the quality of oil also decrease which not only constituted a restraint of trade but also damaged consumers.
Question 2: how do government regulations like the Sherman antitrust act benefit Americans?
A.they ensure individual freedom.
B. They keep competition open and fair.
C. They protect the ideals of the U.S. Constitution.
D. They protect the safety of all Americans.
The correct answer is B. They keep competition open and fair.
Indeed, one of the main principles of capitalism is that competition between businesses forces them to innovate and maintain quality and offer the lowest possible prices to consumers at the best product quality. A consumer will be able to stop buying the products of a given company if these are too expensive or of very low quality and go and buy them from a competitor wit better prices and/or quality.
By becoming a monopoly, there is just one company and no competition, and consumers do not have a choice to buy their goods elsewhere as there is only one company that sells them at whatever price it chooses to and with whatever quality it decides. This lack of choice enables monopolistic companies to produce substandard, expensive goods that consumer have no choice but to buy since there are no competing manufacturers. The Sherman Act was passed exactly to avoid such cases.
