Breaking a Monopoly Firm into Several Rival Firms Will Be

question 155

Multiple Choice

Breaking a monopoly firm into several rival firms will be unlikely to improve economic efficiency when economies of scale are important because

• A) several smaller firms will have higher per-unit costs than a single larger firm.
• B) a single firm will have higher per-unit costs than several smaller firms.
• C) it is harder to regulate many smaller firms than it is one large firm.
• D) consumers will find it harder to choose among the products of many alternative sellers.

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Definitions:

Statute of Frauds

A rule of law mandating that some contract varieties must be documented and signed by the involved parties to be legally binding.

Writing Requirement

A legal stipulation that certain contracts or agreements must be in writing to be enforceable.

Merchants

People or companies involved in buying and selling products, services, or commodities to make profits.

Merchant Agents

Individuals or entities authorized to act on behalf of merchants in commercial transactions.