Answered

Why might the Federal Trade Commission forbid Company A (sells blue widgets for [tex]$1.00) and Company B (sells red widgets for $[/tex]1.25) from merging?

A. To prevent a supply shortage in the widget market.
B. To regulate the market price of widgets.
C. To promote competition between widget makers.
D. To protect the environment from widgets.



Answer :

GinnyAnswer

Final answer:

The Federal Trade Commission may prohibit a merger between Company A and Company B to avoid reduced competition, higher prices, and hindered innovation in the market.


Explanation:

The Federal Trade Commission (FTC) might forbid the merger between Company A and Company B because they sell similar products, which, when merged, could reduce competition in the market. Decreased competition could ultimately lead to higher prices, reduced product availability, and hinder innovation, contrary to the goal of promoting a competitive market.

Consequently, FTC aims to prevent mergers that could potentially create a concentrated market or enable a single firm to raise prices, as per antitrust regulations.

Competition, consumer welfare, and market regulations are key factors that the FTC considers when evaluating the impact of mergers on the marketplace.


Learn more about antitrust regulations

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