Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 25, Problem 14QP
To determine
Explain why the lock-in effect makes it less likely for a firm to benefit from innovation.
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Economics (MindTap Course List)
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- What is the difference between government granted monopolies and free market monopolies? Which one is more cost efficient and why?arrow_forwardWhy do business open shop close to their competitorsarrow_forwardIf patents reduce competition, why does the federal government grant them? The federal government grants patents A. to increase the number of close substitutes available. B. to prevent network externalities. C. to create natural monopolies. D. to encourage firms to collude. E. to encourage firms to spend money on research to create new products.arrow_forward
- How much market power do you think that most firms enjoy? This is an important question as you reflect on your own experience and understanding of firms that you have interacted with.arrow_forwardExplain how economies of scale can be a barrier to entry.arrow_forwardWhy does monopoly need to be regulated?arrow_forward
- Use diagrams to explain what happens when the patent of a product expires, and the firm operates facing new competition from other producers entering the market and offering differentiated varieties of the same product. Explain how the market looks like (i) before the patent expires, (ii) in the short run after the patent expires and (iii) in the long run after the patent expires. Comment on the change in profits for the firm. Please offer examples of real-life markets where this is the casearrow_forwardUnder what circumstances would a large size provide an advantage to a firm? How could it serve as a barrier to entry?arrow_forwardList several reasons that monopolies exist,and explain how each causes barriers to entryarrow_forward
- Product Differentiation is not easy as new firms cannot easily enter the market because it has many barrier. Is that true? Why?arrow_forwardDoes the perfect competition market structure have barriers? If so list specific barriers to entry for the perfect competition market structure.arrow_forwardA patent effectively allows a firm to operate as a monopoly while the patent is in effect. Some people argue that the market power created by patents harms consumers and shouldn't be granted. Others argue that patents are needed to encourage research and innovation. You can read the article from Forbes to learn more about the history and policy surrounding patents. Classify the arguments below as either arguments for patents or arguments against patents. Arguments For Patents Arguments Against Patents Answer Bank prevents free-riding encourages higher prices for consumers prevents competition in the market research results in a positive externality for society leads to an ineffient level of productionarrow_forward
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