If Antitrust Laws Did Not Prohibit Efforts to Restrict Competition

question 125

Multiple Choice

If antitrust laws did not prohibit efforts to restrict competition in markets:

• A) no firms would attempt to collude on price and/or quantity.
• B) attempts at collusion with rival firms on price and or/quantity would succeed all the time.
• C) attempts at collusion with rival firms would probably fail more often than not.
• D) all firms in the economy would earn negative economic profit in the long run.
• E) all firms in the market would earn zero economic profit in the long run.

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Definitions:

Precautions

Actions taken in advance to prevent potential undesirable outcomes or to minimize risks.

Moral Hazard

A situation where one party in a transaction has the opportunity to assume additional risks that negatively affect the other party because they do not bear the full consequences of their actions.

Contract Changes

Modifications or adjustments made to the terms, conditions, obligations, or rights within a contract between parties.

Behavior

The actions or reactions of an entity, often in response to its environment.