Given only the information in the passage, with which one of the following statements about competition would those r...

shunhe on August 6, 2020

Hi @ankita96,

Thanks for the question! So we’re asked here for a statement about competition with which those responsible for the antitrust laws would most likely agree. First of all, what do those responsible for antitrust laws think? Well, what’s the point of these antitrust laws? We’re told that at the end of the passages: to promote consumers’ welfare through assurance of the quality and quantity of products available to consumers (lines 63-65). And what do the antitrust laws say about competition? Well, there seem to be some cases of competition that are ok, and some that aren’t. For example, businesses get to charge “prices that are profitable but so low that its smaller rivals cannot survive,” and that’s not a violation of antitrust laws (lines 38-41). But some kinds of competition aren’t ok. For example, you can’t have tying arrangements or use leverage (discussed in the second-to-last paragraph).

(B) tells us that some ways of competing are acceptable, and some are unacceptable. That’s obviously supported as discussed above, and that’s why it’s the correct answer here.

(A), on the other hand, suggests that they would agree that competition is essential to consumers’ welfare. Where in the passage is this suggested? This might have been something you learned in an economics class, but nothing in the passage suggests this. Indeed, if those responsible for antitrust laws agreed with (A), why would there be any laws restricting competition? Why not allow for unfettered competition? (A) isn’t supported by the passage, and so is incorrect.

Hope this helps! Feel free to ask any other questions that you might have.

ankita96 on August 6, 2020

Hi, but in the last para also they do mention the whole purpose is consumer welfare. I am still confused why that would be wrong.

shunhe on August 7, 2020

Hi @ankita96, it's true that they say the purpose is for consumer welfare, but that doesn't mean it's ESSENTIAL for consumer welfare. Those are two different concepts. For example, people make smoothies and the purpose is for nutrition. But are smoothies ESSENTIAL for nutrition? No, you could just eat the veggies/fruits normally. Nothing suggests that it is NEEDED for consumer welfare, and that's why it's wrong.

ankita96 on August 8, 2020

Oh shoot, yeah! So could we say that this would be the correct , if essential was removed?