What is the significance of the Federal Trade Commission (FTC) in the American Free Enterprise System?

What is the significance of the Federal Trade Commission (FTC) in the American Free Enterprise System?

• A. Encourages monopolies to form
• B. Protects consumers and prevents unfair competition
• C. Sets prices for goods and services
• D. Regulates only foreign businesses

Answer: (B)

The significance of the Federal Trade Commission (FTC) in the American Free Enterprise System lies in its role as a protector of consumers and an enforcer of fair competition. The FTC works to prevent anti-competitive practices, such as monopolies and deceptive advertising, ensuring that consumers have access to a variety of choices and can make informed decisions in the marketplace.

By enforcing laws that prohibit unfair competition and deceptive acts, the FTC helps to maintain a level playing field for businesses. This is essential for fostering innovation and ensuring that market dynamics benefit consumers through fair pricing and quality products. The commission's oversight helps to build trust in the market, which is vital for a healthy economy.

Other options do not accurately capture the FTC's role. For instance, rather than encouraging monopolies, the FTC actively seeks to dismantle them to promote competition. It does not set prices for goods and services, as that is typically determined by the market forces of supply and demand. Lastly, its regulatory authority extends to both domestic and foreign businesses operating within the US, not limited to foreign entities. The core function of the FTC aligns with its mission to protect consumers and preserve competition, making it a crucial aspect of the American Free Enterprise System.