Which of the following statements is correct?
A)Two examples of early antitrust laws are the Clinton and Stigler Antitrust Acts.
B)Antitrust laws automatically prevent mergers between companies that produce similar products.
C)Antitrust laws reduce the government's power to regulate private companies.
D)Antitrust laws can reduce social welfare if they prevent mergers that would lower costs through more efficient joint production.

Question

Quizplus · Accepted Answer

Option D is correct because antitrust laws may prohibit mergers that would increase efficiency and innovation, leading to a decrease in social welfare. Antitrust laws aim to prevent abusive and monopolistic practices that harm competition and consumers, but their enforcement should consider the trade-offs between market power and efficiency gains. Options A and B are incorrect because there is no Clinton or Stigler Antitrust Act, and antitrust laws do not always prevent mergers but scrutinize them under specific criteria. Option C is incorrect because antitrust laws enhance the government's regulatory authority by setting rules and procedures to ensure fair competition and prevent market failures.

Which of the Following Statements Is Correct