Author Question: Antitrust cases that are brought to the courts by the Justice Department typically rely on perfect ... (Read 109 times)

Kthamas · **on:** Jun 29, 2018

Antitrust cases that are brought to the courts by the Justice Department typically rely on perfect competition as a benchmark for lawyers to determine whether a firm is competitive or monopolistic.

Why is this a troublesome criterion to use in prosecuting such cases?

Question 2

Distinguish between comparative advantage and absolute advantage.

What will be an ideal response?

whitcassie · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

It is troublesome because there are no instances of pure competition in the real world. Therefore regulators are using a benchmark that lacks realism.

Answer to Question 2

A person has a comparative advantage in producing a good when he or she has the lowest opportunity cost of producing it. Comparative advantage is based on the output forgone. A person has an absolute advantage in production when he or she uses the least amount of time or resources to produce one unit of that particular good or service. Absolute advantage is a measure of productivity in using inputs.