Just options d and f please. 8. Choose two of the following questions to answer:
ID: 1119500 • Letter: J
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Just options d and f please.
8. Choose two of the following questions to answer: Why does the government give monopoly rights in the form of copyrights and patents? b. c. Why did OPEC (the oil producing and exporting countries) form a cartel? Define cartel d. How do we decide who produces what? Give examples of natural monopolies. What has the government decided in these cases? and explain why they would consider this option. Why are there more soap companies than cereal companies in the US? What kind of industries do these represent? f. How is having your car repaired by a mechanic an example of a principle-agent (asymmetric information) problem?Explanation / Answer
a) The government gives monopoly rights in the form of patents and copyrights so that the monopolist can earn his share of profits, and is not deterred in the future to produce more innovative products which have positive externalities in the society.
e). There are more soap companies than cereal companies in the US because soap is a product with many variants, while cereals usually have almost same quality. Thus people usually have different preferences for different soaps in terms of fragrance, size etc. while cereal's quality more or less remains the same. Hence there are more soap industries than cereal's.
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