A government-created monopoly arises when A the government exercises its market control by encouraging competition among sellers. B the government collects taxes in a particular industry. C the government gives a firm the exclusive right to sell some good or service. D government spending in a certain industry gives rise to monopoly power.
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A government-created monopoly arises when a. the government collects taxes in a particular industry. b. the government exercises its market control by encouraging competition among sellers. c. the government gives a firm the exclusive right to sell some good or service. d. government spending in a certain industry gives rise to monopoly power.
Andrew D.
A monopoly, unlike a perfectly competitive firm, has some market power. Thus, it can raise its price, within limits, without quantity demanded falling to zero. The main way monopolies retain their market power is through barriers to entry, which prevent other companies from entering monopolized markets and competing for customers. Consider the market for tanzanite. The mines for this blue-purple gemstone, found only in Tanzania, are owned by the local government. Given that no one is allowed into the mines without government permission, the market structure for tanzanite highly resembles that of a monopoly. Which of the following best explains the barriers to entry that exist in this scenario? A. Exclusive ownership of a necessary resource B. Legal barriers C. Increasing returns to scale
Rachel G.
A monopoly, unlike a perfectly competitive firm, has some market power. Thus, it can raise its price, within limits, without quantity demanded falling to zero. The main way monopolies retain their market power is through barriers to entry, which prevent other companies from entering monopolized markets and competing for customers. Consider the market for pharmaceutical products. Patents are granted to inventors of products or processes for a certain number of years to encourage innovation. Without patents, research and development needed to improve pharmaceutical products are unlikely to occur, as nothing would then prevent other firms from stealing ideas and copying products. Which of the following best explains the barriers to entry that exist in this scenario? (a) Exclusive ownership of a necessary resource (b) Legal barriers Increasing returns to scale (c) Increasing returns to scale
Jennifer S.
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