Describe how monopolists use barriers to entry to maintain their pricing power.
What will be an ideal response?
Monopolists use patents, monopoly franchises, control of key inputs, lawsuits, acquisition, and economies of scale to keep from facing competition and thus maintain their pricing power. Patents are created by the government and give the patent-holding firm 20 years of exclusive rights to produce a particular product. Monopoly franchises are also created by the government and give a single firm the right to supply a particular good or service. If firms control key inputs, they can lock competing firms out of the market. Lawsuits create a barrier to entry when a monopolist alleging patent or copyright infringement derails competition by absorbing critical management effort, cash, and time. Monopolies can acquire other firms in the industry to reduce competition. Finally, some monopolies may persist because of economies of scale-that is, they have a substantial cost advantage over smaller firms.
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In the above figure, the price paid by the buyer before the tax is ________ per compact disc, and the price paid by the buyer after the tax is ________ per compact disc
A) $20; $20 B) $20; $30 C) $30; $20 D) $30; $30
What does it mean when economists say that labor and capital are complementary inputs?
What will be an ideal response?
Which of the following is a reason for the Keynesian view that monetary policy plays a minor role in affecting the economy?
a. The money demand curve is vertical. b. The investment curve is very steep. c. The money demand curve is horizontal at any interest rate. d. The monetary rule.
Over the past 100 years, in the United States the average growth rate of ________ grew at a faster rate than ________
A) real GDP; nominal GDP B) the population; real GDP C) real GDP; the population D) inflation; real GDP