5. What is the basic idea underlying the theory of countervailing power, and what policy does it suggest with respect to government’s role in regulating prices? It assumes that

a. the economy is composed of competing economic blocs that ensure that no one bloc acquires undesirable market power, so that laissez-faire is the appropriate policy.

b. the economy is composed of competing economic blocs that organize to create undesirable market power, so that regulation is the appropriate policy.

c. the economy is highly monopolized but the threat of potential entry into the markets of these monopolies by new firms keeps monopoly prices in check, so that laissez-faire is the appropriate policy.

d. the economy is highly monopolized and the threat of potential entry into the markets of these monopolies by new firms is nonexistent, so that regulation is the appropriate policy.

e. in time, monopoly markets become highly competitive because of changing technologies, so that laissez-faire is the appropriate policy.