Reducing Barriers to Entry Fosters Competition

Steps:

• Identify the goal: Governments prevent monopolies by promoting competition in markets.
• Recall monopoly definition: A single firm dominates due to high barriers blocking new entrants.
• Evaluate options: Look for choices that increase market entrants to challenge dominant firms.
• Select best fit: Reducing barriers allows more firms to enter, eroding monopoly power.

Why D is correct:

• Barriers to entry, per economic theory, protect monopolies by limiting competition; reducing them enables new firms to join, increasing rivalry and preventing dominance.

Why the others are wrong:

• A: Encouraging mergers consolidates firms, raising monopoly risk.
• B: Nationalizing industries creates government monopolies, not competition.
• C: Promoting economies of scale benefits large firms, strengthening potential monopolies.

Final answer: D