1. Sources of monopoly power Aa Aa A monopoly, unlike a perfecty competitive fir

Question

1. Sources of monopoly power Aa Aa A monopoly, unlike a perfecty competitive firm, assumes some market power. It can raise its price, within without the quantity demanded falling to zero. The main way It retains its market power is through entry-that Is, other companies cannot enter the market to create competition In that particular industry. barriers to Consider the market for computer technology. Patents are granted to inventors of a product or process for a certain number of years to encourage innovation. Without the patents, the research and development to improve computer technology is unlikely to take place, because nothing prevents other firms from stealing the idea, copying the product, and producing it. Which of the following best explains the barriers to entry that exist in this scenario? O Economies of scale O Exclusive ownership of a scarce resource O Legal restrictions

Explanation / Answer

In the above scenario. Since technology is patented which is legal resriction for other firm to not copy the technology and thus give the market power as well as incentive for research and to invent new technology.

Ans is C

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