Asked by Ashton Krause on May 11, 2024
Verified
The legal cartel theory indicates that in any industry where market demand and the long-run average total cost curve intersect close to the latter's minimum, government regulation is mandatory and desirable.
Legal Cartel Theory
A theoretical framework suggesting that under certain legal frameworks, firms may engage in cartel-like behavior legally.
Average Total Cost
Represents the total cost per unit of output, calculated by dividing the total cost of production by the number of units produced.
- Comprehend the economic reasoning behind monopolies, mergers, and market powers as addressed in antitrust regulations.
Verified Answer
RP
rajveer PooniaMay 14, 2024
Final Answer :
False
Explanation :
The legal cartel theory suggests that in industries where the conditions allow firms to act as a cartel (limiting output to raise prices), government regulation might be necessary to prevent monopolistic practices, but it does not state that regulation is mandatory and desirable in all cases where demand intersects the long-run average total cost curve near its minimum. The theory primarily addresses concerns about monopolistic or oligopolistic market structures rather than prescribing regulation based solely on cost and demand intersections.
Learning Objectives
- Comprehend the economic reasoning behind monopolies, mergers, and market powers as addressed in antitrust regulations.
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