Market power is what allows firms to make profit and it comes from all of the following except O Patents O High consumer demand O Government licenses O Product innovation

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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**Question:**

Market power is what allows firms to make profit and it comes from all of the following except ___________.

- Patents
- High consumer demand
- Government licenses
- Product innovation

**Explanation:**

This question examines the sources of market power, a concept in economics that describes the ability of a firm to raise prices above the competitive level. The options provided include various sources commonly associated with market power.

- **Patents:** Legal rights granted to inventors, providing them exclusivity to their innovations, often resulting in market power.
- **High consumer demand:** Refers to the desire for goods or services that may not directly create market power but could enhance it in conjunction with other factors.
- **Government licenses:** Authorizations that allow firms to operate in specific markets, potentially limiting competition and increasing market power.
- **Product innovation:** The development of new or improved products, which can establish or enhance market power by differentiating a firm's offerings from competitors.

The task is to identify which option does not directly contribute to market power.
Transcribed Image Text:**Question:** Market power is what allows firms to make profit and it comes from all of the following except ___________. - Patents - High consumer demand - Government licenses - Product innovation **Explanation:** This question examines the sources of market power, a concept in economics that describes the ability of a firm to raise prices above the competitive level. The options provided include various sources commonly associated with market power. - **Patents:** Legal rights granted to inventors, providing them exclusivity to their innovations, often resulting in market power. - **High consumer demand:** Refers to the desire for goods or services that may not directly create market power but could enhance it in conjunction with other factors. - **Government licenses:** Authorizations that allow firms to operate in specific markets, potentially limiting competition and increasing market power. - **Product innovation:** The development of new or improved products, which can establish or enhance market power by differentiating a firm's offerings from competitors. The task is to identify which option does not directly contribute to market power.
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