By breaking up AT&T, the Justice Department expected that the telecommunications market would change from
Multiple Choice
a monopoly toward a competitive market.
a contestable market to a monopoly.
a competitive market toward a monopoly.
an oligopoly to a perfectly competitive market.
a monopoly toward a competitive market.
By breaking up AT&T, the Justice Department expected that the telecommunications market would change from
a monopoly toward a competitive market.
To determine the correct answer, it is essential to understand the context of the question. The question is related to the actions of the Justice Department in regard to AT&T, which implies that there was an intervention or legal action taken against the company.
The Justice Department's objective in this case was likely to promote competition in the telecommunications market. AT&T, at the time, held a dominant position in the industry, which could be seen as a monopoly or an oligopoly. Breaking up AT&T would involve dividing the company into smaller, independent entities, thereby reducing its market power and creating more opportunities for competition.
Let's analyze the options:
a) "From a monopoly toward a competitive market": This option aligns with the objectives of the Justice Department, as it suggests that with the breakup of AT&T, the market would shift from a monopolistic state to a more competitive one.
b) "From a contestable market to a monopoly": This option contradicts the goals of the Justice Department because transitioning from a contestable market (where entry barriers are low, encouraging competition) to a monopoly goes against promoting competition.
c) "From a competitive market toward a monopoly": This option also contradicts the goals of the Justice Department, as it implies a regression from a competitive market to a monopoly, which is typically discouraged.
d) "From an oligopoly to a perfectly competitive market": This option is not aligned with the goals of the Justice Department because an oligopoly (where a few firms dominate the market) does have some competition, albeit limited. The objective would be to increase competition, not necessarily create a perfectly competitive market.
Considering the options and the context, the correct answer is:
a) From a monopoly toward a competitive market.