Question

6
a large public corporation in the telecommunications industry has become so powerful that it uses its vast resources to prevent other companies from entering the market as a competitor. the federal courts determine the company to be an illegal monopoly and order it to be split into multiple separate corporations. why is this government action considered appropriate in americas free market economy?
a. by acting to disband a monopoly, the government is actually protecting competition and the free market.
b. in a free market economy, it is important for wealth to be distributed evenly.
c. despite popular belief, america is not meant to have a free market economy.
d. the government has extraordinary power to step in and intervene in cases dealing with public corporations.
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Explanation:

In a free - market economy, competition is crucial. Monopolies restrict competition by preventing new firms from entering the market. By breaking up the monopoly, the government is safeguarding the free - market principles that rely on competition.

• Option B: A free - market economy does not aim for even wealth distribution. Its focus is on economic freedom, private property, and competition.
• Option C: America is generally considered to have a free - market economy (with some government regulations).
• Option D: While the government has regulatory powers, the key reason for this action in a free - market context is related to protecting competition, not just having the power to intervene.

Answer:

A. By acting to disband a monopoly, the government is actually protecting competition and the free market.