Antitrust laws have economic benefits that outweigh the costs if they:

• A. guarantee higher prices for consumers by restricting supply
• B. promote competition without imposing excessive regulatory burdens
• C. eliminate all large firms from the market regardless of their behavior
• D. discourage innovation by limiting firm size

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the purpose of antitrust laws in microeconomics. Antitrust laws are designed to promote competition in the market by preventing monopolies and anti-competitive practices that harm consumers and economic efficiency.
2. Step 2: Analyze the economic benefits of antitrust laws. These benefits typically include lower prices, increased product variety, improved quality, and innovation due to competitive pressure among firms.
3. Step 3: Consider the potential costs of antitrust laws. These can include regulatory burdens on firms, enforcement costs, and the risk of discouraging efficient large firms or innovation if regulations are too strict.
4. Step 4: Evaluate each option in the problem statement against the goal of antitrust laws. For example, guaranteeing higher prices by restricting supply contradicts the goal of promoting competition and consumer welfare.
5. Step 5: Conclude that antitrust laws have net economic benefits when they promote competition effectively without imposing excessive regulatory burdens, as this balances encouraging market efficiency and protecting consumers.