Economic Thinking Suggests That a Nation in Which Middlemen Are

question 120

Multiple Choice

Economic thinking suggests that a nation in which middlemen are considered to be unproductive seekers of profit, and where their activities are heavily restricted by law, will

• A) gain by channeling people's efforts away from unproductive middleman activity toward physical output.
• B) lose the potential gains from trade that would result from lower transaction costs emanating from middleman activities.
• C) find that it is richer because the added transaction costs normally imposed by middlemen will be reduced.
• D) gain because the value of total output will rise.

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Definitions:

Conglomerate Merger

A type of merger involving companies that are involved in totally unrelated business activities, aiming for diversification.

Horizontal Merger

A merger between companies operating in the same industry, often as competitors offering similar products or services.

Antitrust Laws

Legislation designed to promote competition and prevent monopolies by regulating the conduct and organization of business corporations, especially to promote fair competition for the benefit of consumers.

Competition

The rivalry among businesses to attract customers, improve offerings, and achieve market dominance.