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Why does the government need to regulate the free market to protect competition?

  • Question 1a of 10 - Unfair business practices

  • Maximum Attempts: 1
  • Question Type: Multiple Choice
  • Maximum Score: 2
  • Question: Why does the government need to regulate the free market to protect competition?
  • Answers:
  1. Competition by itself cannot make companies efficient and innovative.
  2. Producers driven by the profit motive seek to reduce their competition.
  3. The government would always have a budget surplus if it didn't protect competition.
  4. Foreign producers are able to undersell domestic producers and drive them out of business.

The correct answer is: Producers driven by the profit motive seek to reduce their competition. Eliminating competition enables producers to charge higher prices and make greater profits.

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