PrepTest 67, Section 3, Question 4
An economist has argued that consumers often benefit when government permits a corporation to obtain a monopoly. Without competition, a corporation can raise prices without spending nearly as much on advertising. The corporation can then invest the extra money in expensive research or industrial infrastructure that it could not otherwise afford, passing the fruits of these investments on to consumers.
An economist has argued that consumers often benefit when government permits a corporation to obtain a monopoly. Without competition, a corporation can raise prices without spending nearly as much on advertising. The corporation can then invest the extra money in expensive research or industrial infrastructure that it could not otherwise afford, passing the fruits of these investments on to consumers.
An economist has argued that consumers often benefit when government permits a corporation to obtain a monopoly. Without competition, a corporation can raise prices without spending nearly as much on advertising. The corporation can then invest the extra money in expensive research or industrial infrastructure that it could not otherwise afford, passing the fruits of these investments on to consumers.
An economist has argued that consumers often benefit when government permits a corporation to obtain a monopoly. Without competition, a corporation can raise prices without spending nearly as much on advertising. The corporation can then invest the extra money in expensive research or industrial infrastructure that it could not otherwise afford, passing the fruits of these investments on to consumers.
Which one of the following, if true, most strengthens the economist's argument?
The benefits to consumers are typically greater if a corporation invests in expensive research or industrial infrastructure than if that corporation spends the same amount of money in any other way.
The government's permitting a corporation to obtain a monopoly is advantageous for consumers only if that corporation passes the fruits of at least some of its investments on to consumers.
If a corporation obtains a monopoly, the disadvantage to consumers of any higher prices will be outweighed by the advantages from extra investments in expensive research or industrial infrastructure made by that corporation.
Even if a corporation is not permitted to obtain a monopoly, it typically invests some money in expensive research or industrial infrastructure.
If obtaining a monopoly enables a corporation to raise its prices and invest less money in advertising, that corporation will almost inevitably do so.
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