WESTWARD EXPANSION INDUSTRIALIZATION URBANIZATION 1870 1900
ANDREW CARNEGIE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Because they kept prices too high and hurt everyday people
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Because they became as powerful as the government
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Because prices became so low that the economy crashed
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Because people stopped buying anything
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Detailed explanation-1: -Why the Government regulates monopolies. Prevent excess prices. Without government regulation, monopolies could put prices above the competitive equilibrium. This would lead to allocative inefficiency and a decline in consumer welfare.
Detailed explanation-2: -Potential Competition: The monopolist may fear potential competitors. The monopolist at present may not have any competitors; but, if he consistently charges high prices for his product, the new competitors may emerge to throw a challenge and ultimately may succeed in break his monopoly position.
Detailed explanation-3: -Monopolies are generally considered to be bad for consumers and the economy. When markets are dominated by a small number of big players, there’s a danger that these players can abuse their power to increase prices to customers.
Detailed explanation-4: -Monopolies have the ability to limit output, thus charging a higher price than would be possible in competitive markets. Unlike a competitive company, a monopoly can decrease production in order to charge a higher price.