Question

Antitrust laws promote efficiency by: creating regulations. reducing monopoly power. reducing information asymmetries. allowing mergers to take place. Antitrust laws may create inefficiencies by: allowing mergers to take place. breaking up natural monopolies. reducing information asymmetries. stopping price discrimination.

Answer 1

Answer: 1. reducing monopoly power.

2. breaking up natural monopolies.

Explanation: Antitrust laws were also referred to as competition laws. These laws are developed by the US government to protect the consumers from unethical or ill-legal business practices. These laws ensures the existence of fair competition in the economy of open-market.

1. The antitrust law will reduce the monopoly power as a result of which the competition will increase. Due to competition the production of goods and services will also increase. This will enhance the efficiencies.

2. The antitrust law will break up the natural monopoly. So the benefit of natural monopoly will reduce and average cost of production will increase. This will create inefficiencies.