Concept: Government Blocks Entry 1 Governments often have the potential to influ

Question

Concept: Government Blocks Entry 1 Governments often have the potential to influence whether firms are How might the government affect whether a firm is a monopoly? The government could monopolies. 0 A. reduce taxes so that a firm benefits from diseconomies of scale. 0 B. grant a patent to a firm, giving it the exclusive right to produce a product. O C. grant a copyright to a firm, making it a natural monopoly. O D. grant a firm a public franchise, making it a natural monopoly. 0 E. grant a firm a public enterprise, allowing it to benefit from network externalities.

Explanation / Answer

B) grant a patent to a firm, giving it the exclusive right to produce a product.

Government grant patent right to a particular firm in the industry which gives firm an exclusive right to produce a product in the market. No other firm cannot produce the same output. So, monopoly arises due to patent right.

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