[amp_mcq option1=”The firm controls the entire supply of raw material” option2=”Production of the industry’s product is subject to economies of scale over a broad range of output” option3=”Production of the industry’s product requires a large initial capital investment” option4=”The firm holds an exclusive government franchise” correct=”option4″]<\/p>\n
The correct answer is: D. The firm holds an exclusive government franchise.<\/strong><\/p>\n A monopoly is a market structure in which there is only one seller of a good or service. This means that the monopolist has a great deal of market power and can charge high prices without fear of losing customers to competitors.<\/p>\n There are a number of barriers to entry that can prevent new firms from entering a market and competing with a monopolist. One such barrier is an exclusive government franchise. This is a government grant that gives a firm the sole right to produce a good or service in a particular market.<\/p>\n Exclusive government franchises can create monopolies for a number of reasons. First, they can prevent new firms from entering the market. If a firm knows that it will not be able to compete with the monopolist, it is unlikely to invest the time and money necessary to enter the market.<\/p>\n Second, exclusive government franchises can give the monopolist a great deal of market power. The monopolist is the only seller of the good or service, so it can charge whatever price it wants. This can lead to higher prices for consumers and lower quality goods and services.<\/p>\n Third, exclusive government franchises can stifle innovation. The monopolist does not have to worry about competition, so it has little incentive to improve its products or services. This can lead to a decrease in the quality of goods and services available to consumers.<\/p>\n In conclusion, exclusive government franchises are a barrier to entry that can create monopolies. Monopolies can lead to higher prices, lower quality goods and services, and a decrease in innovation.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”The firm controls the entire supply of raw material” option2=”Production of the industry’s product is subject to economies of scale over a broad range of output” option3=”Production of the industry’s product requires a large initial capital investment” option4=”The firm holds an exclusive government franchise” correct=”option4″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-59756","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n