4. How might the government deal with a huge company that has no competitors and is charging customers high prices?
a. break the company up into smaller competing firms
b. fine the company based on its profits for a given year
c. force the company to pay taxes at a given year
d. assign a government agent to observe the company's leadership
a. break the company up into smaller competing firms
It's break the company up in to smaller competing firms
Correct. Breaking up the company into smaller firms is a way the government can promote competition and lower prices for consumers. This is known as antitrust action and is designed to prevent monopolies from dominating the market.
To deal with a huge company that has no competitors and is charging customers high prices, the government may consider the following options:
a. Break the company up into smaller competing firms: One approach the government can take is to enforce antitrust laws and break up the monopolistic company into smaller, independent firms. This can enhance competition in the market, giving consumers more options and potentially lowering prices.
b. Fine the company based on its profits for a given year: Another option is to impose fines on the company based on its profits. By levying substantial fines, the government sends a strong message and discourages anti-competitive behavior, pushing the company to reconsider its pricing practices.
c. Force the company to pay taxes at a given year: The government can also utilize tax laws to regulate the company's behavior. By imposing higher taxes on the company, especially on excessive profits, the government can disincentivize monopolistic behavior and encourage fairer pricing for consumers.
d. Assign a government agent to observe the company's leadership: In some cases, the government may assign a government agent or regulatory body to closely observe the company's activities, particularly its pricing decisions and practices. By having a regulatory presence, the government can ensure that the company adheres to fair competition standards and avoids exploiting its market dominance.
It is worth noting that the specific approach taken by the government will depend on the legal framework, existing regulations, and the severity of the issue at hand. Different countries may have varying strategies in dealing with monopolistic companies, and the effectiveness of these measures can also vary.