If antitrust laws did not prohibit efforts to restrict competition in markets,then
A) no firms would attempt to collude on price and/or quantity.
B) attempts at collusion with rival firms on price and or/quantity would succeed all the time.
C) attempts at collusion with rival firms would probably often fail.
D) all firms in the economy would earn negative economic profit in the long run.
E) all firms in the market would earn zero economic profit in the long run.

Question

Quizplus · Accepted Answer

Even if antitrust laws did not prohibit efforts to restrict competition, attempts at collusion with rival firms would probably often fail due to the incentive for individual firms to cheat on the agreed-upon conditions in order to gain a competitive advantage. As a result, there is likely to still be some competition in the market, although it may not be as intense as it would be in a perfectly competitive market. Option A is incorrect because firms may still attempt to collude even if antitrust laws did not exist. Option B is incorrect because there are various factors that could affect the success of collusion efforts. Options D and E are irrelevant as they do not relate to the impact of antitrust laws on competition.

If Antitrust Laws Did Not Prohibit Efforts to Restrict Competition