#19 - Concept Reference, Must Be True

[Administrator]

Complete Question Explanation

The correct answer choice is (B).

Answer choice (A):

Answer choice (B): This is the correct answer choice.

Answer choice (C):

Answer choice (D):

Answer choice (E):


This explanation is still in progress. Please post any questions below!

[youminm]

Hello.
Could anyone explain this question to me? I chose (A) at first, and I don't understand why (B) is right. I originally understood abuse of monopoly power is the only one that can reduce the competition, not the monopoly itself. Moreover, I don't understand why (A) is wrong. Could anybody go through this question and answer choices?

Thank you.

[Adam Tyson]

I'll do my best!

The passage is a law-related passage about the role of antitrust laws and the behavior of monopolies that may or may not violate such laws. We learn, for example, that antitrust laws don't prohibit the existence of monopolies, just their abusive behavior that reduces competition. We also learn that only certain behaviors are considered abusive - it's okay to make a high profit, and even to drive out competition by setting prices too low for smaller competitors to stay in the market. Ultimately, the passage tells us that the primary purpose of such laws is to promote consumers' welfare.

Question 19 is a concept reference question, asking us which statement the author would most likely agree with. It's a form of Must Be True, which means the evidence supporting our answer will be found in the passage and will not be new, outside info.

Answer A, competition is essential, is directly contradicted by the passage. We are told that antitrust laws are about promoting consumer welfare, but they allow non-abusive monopolies to exist. Look around line 39 for some support for that idea. If monopolies can exist and not be in violation of the laws, then competition must not be essential. Remember, the goal is not to prohibit monopolies, but to promote consumers' welfare. If competition was essential, the laws would prohibit monopolies.

Answer B says that there are acceptable ways to reduce competition and also unacceptable ways. Look to that same language around line 39 for support - a monopoly that is able to use economies of scale to reduce costs and underprice the competition, driving them out, is acceptable, presumably because that ends up benefiting consumers. Much of the rest of the passage supports the "unacceptable" argument by describing the ways that monopolies might reduce competition through abusive behavior that the antitrust laws are designed to prohibit.

Hope that helps clear things up! Good luck on the test.

[youminm]

Thank you very much. It has helped me understand the question so easily!