A successful cruise ship manufacturer begins buying all of the businesses that supply the materials and technology involved in cruise ship manufacturing. As the manufacturer grows in size, it is able to purchase smaller struggling firms until no competition remains. Being the only producer of cruise ships, it is now able to set higher prices with lower quantities supplied than previously existed in a competitive environment.

Which of the following might the government employ to prevent this scenario from happening?

A. Taxation
B. Subsidies
C. Antitrust law
D. Price floor



Answer :

Final answer:

Antitrust law is used by governments to prevent market domination and ensure fair competition.


Explanation:

Antitrust law is a tool that governments can employ to prevent scenarios where a single firm dominates a market, leading to higher prices and reduced competition. These laws aim to promote fair competition by prohibiting practices such as monopolies and tight oligopolies. By enforcing antitrust laws, governments can prevent firms from engaging in anti-competitive behavior such as mergers that would increase market concentration.


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