1. What does the government do to protect competition in a free-market system? Explain why the government needs to take these actions.
There are several actions that the government takes to protect competition in a free-market system. These actions include enforcing antitrust laws to prevent monopolies and other anti-competitive behavior, regulating industries to ensure fair competition, and promoting consumer protection.
The government needs to take these actions to prevent abuse of market power by dominant firms, which can lead to higher prices, reduced choice for consumers, and stifled innovation. Monopolies and cartels can also harm smaller businesses by driving them out of the market, further reducing competition.
Regulating industries and enforcing antitrust laws helps to level the playing field and ensure that all businesses have a fair chance to compete. This promotes innovation, efficiency, and low prices for consumers. Additionally, consumer protection measures help to ensure that consumers are not taken advantage of by unscrupulous businesses.
Overall, government intervention is necessary in a free-market system to protect competition and ensure that markets operate efficiently and fairly for the benefit of both businesses and consumers.