Question

A law that encourages market competition by prohibiting firms from gaining or exercising excessive market power is a. an externality law. b. impossible to enforce. c. an antitrust law. d. a patent.

Answer 1

The correct answer is option c.

Explanation:

A patent is a type of barrier to restrict entry into the market. It limits competition. If a person holds patent for a product, no other person can produce that good without their permission.

An anti trust law is made to ensure fair competition in the market. It is formulated to protect consumers from predatory practices of sellers.

This law is not impossible to enforce and is not an externality law.