Governments often have the potential to influence whether firms are monopolies leading. How might the government affect whether a firm is a monopoly? The government could
a. grant a firm a public franchise, making it a natural monopoly.
b. grant a patent to a firm, making it a natural monopoly.
c. reduce taxes so that a firm benefits from diseconomies of scale.
d. grant copyright to a firm, giving it the exclusive right to produce a product
e. grant a firm a public enterprise, allowing it to benefit from network externalities.

Question

25-12-2019
Business

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Governments often have the potential to influence whether firms are monopolies leading. How might the government affect whether a firm is a monopoly? The government could
a. grant a firm a public franchise, making it a natural monopoly.
b. grant a patent to a firm, making it a natural monopoly.
c. reduce taxes so that a firm benefits from diseconomies of scale.
d. grant copyright to a firm, giving it the exclusive right to produce a product
e. grant a firm a public enterprise, allowing it to benefit from network externalities.

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The correct answer would be option D, grant a patent to a firm, giving it the exclusive right to produce a product.

Governments often have to potential to influence whether firms are monopolies leading. The government could influence the monopoly by granting patent to it, and giving it the exclusive rights to produce a product.

Explanation:

Patent is basically given rights to an investor to produce, design, or invent a product or service for a period of time. Patent gives the owner, rights to produce, design, innovate, sell, and use the product or service without the fear of competition in that particular product or service.

So when government wants to make monopoly of a firm in the country, it grants a patent to that firm, giving it exclusive rights to produce that product. For example, in Pakistan, WAPDA is the electricity provider, who has the monopoly in the country and is backed by the government.

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