Which one of the following distinctions between monopoly power and the abuse of monopoly power would the author say u...

SamA on October 1, 2019

Hello @Julie-V,

I think an important phrase in the question stem is "underlies anti trust laws." I take this to mean that we need to look for the primary purpose of antitrust laws. When does monopoly power become abuse of market power? When consumers are harmed. This is the purpose of paragraph 3, which demonstrates how a firm can legally use its monopoly power without harming consumers. This is where I found support for E, as well as in the final sentence of the passage. It says clearly that the purpose of antitrust laws is to promote consumers' welfare. This is why E is correct.

I do see the appeal of answer choice A. It does say that market share is a rough indicator of monopoly power, so that could fulfill the first statement. However, is control of the market always an abusive situation? I do not believe so, because the company from the same example above kills its competition with its low prices. I would argue that this is control of the market, but it is not defined as abusive. The difference between market power and market share seems to be a somewhat unimportant distinction. When we pay attention to the main points and tone of the passage, we can see that consumer harm is the underlying factor.