Monday, October 31, 2011

Government Sues to Block AT&T/T-Mobile Merger

The United States Government sued to stop the AT&T/T-Mobile merger. The government fears that if these two very marketable cellular mobile companies team up together it will cease the competition, therefore raising prices in consumer products. Through the concept of law of demand, this exact situation leads our economy to plummet because it shows that as prices raise, the consumers buy less of the product. This could cause excess supply, leaving the merged companies in disequilibrium. With the point of equilibrium resting above the original balanced point, it will make the company lose money to pay for all the supplies needed in order to sell these products in the first place. With the loss of competition in our free market economic system, it lowers both companies total revenues to greatly decrease in profits which could higher the possibility of these two successful companies to go out of business. Since technology has defined the line of everyone's basic necessity in our everyday lives, the companies to stay apart would be the best for the economy as the Real Gross Domestic Product (GDP) rises every quarter.

1 comment:

Sara MacDowell said...

Miranda, I thought your post was so interesting and I wasn't aware that AT&T and T-Mobile were attempting to merge their companies into one. I can honestly say I was happily surprised that government refused this merge. I agree with your point that if these two companies merge, then competition will cease greatly and prices for these phones would increase.