“The regulatory force in the market system bears the seeds of its own destruction.” Explain and evaluate
Please provide the best answer for the statement.
Competition is the regulatory mechanism of the market economy. However, a successful competitor has the potential of driving rivals out of business if the most successful firm is more efficient and other firms are either purchased or leave the industry unable to compete with the most successful. If this occurs, there is the potential of just a few successful firms remaining in the industry, and the competition that once existed has been reduced or even ultimately destroyed as the most successful firms gain monopoly power.
In other words, competitive firms want to “beat” their rivals, but if they are successful in damaging their competitors, they would also destroy competition.
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Refer to Figure 28-3. The shifts shown in the short-run and long-run Phillips curves between period 1 and period 2 could be explained by
A) either an increase in expected inflation from 4.0 to 5.5 percent or an increase in the natural rate of unemployment from 5.5 to 6.8 percent. B) an increase in the expected inflation rate from 4.0 to 5.5 percent. C) an increase in the natural rate of unemployment from 5.5 to 6.8 percent. D) None of the above is correct.
Can consumption efficiency be achieved even if the efficient product mix is not achieved?
What will be an ideal response?
Suppose rice is a normal good. If consumers' incomes fall, and a new technology is introduced that lowers the marginal cost of producing rice, then the equilibrium:
A. quantity of rice will decrease, but we cannot say for sure what will happen to the equilibrium price. B. quantity of rice will increase, but we cannot say for sure what will happen to the equilibrium price. C. price of rice will fall, but we cannot say for sure what will happen to the equilibrium quantity. D. price of rice will increase, but we cannot say for sure what will happen to the equilibrium quantity.
Voluntary exchange is a change that makes
A. some people better off and nobody worse off. B. nobody better off and nobody worse off. C. everyone better off and nobody worse off. D. some people better off and some people worse off.