Author Question: A patent gives a firm a monopoly in the production of the patented good. While monopoly profits ... (Read 89 times)

Mimi · **on:** Jun 30, 2018

A patent gives a firm a monopoly in the production of the patented good. While monopoly profits provide an incentive for firms to innovate, the monopoly power imposes a cost on consumers. Why do consumers bear a cost from that monopoly? Is the cost to consumers greater than the profits earned by the monopolist?

Question 2

The annual membership fees of the 185 member countries of the IMF are called:
a. annuities.
b. quotas.
c. vetos.
d. conditionalities.
e. petrodollars.

kardosa007 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Consumers bear a cost because monopolists produce less output and charge a higher price than in a competitive industry. There is a resulting loss of consumer surplus. However, only part of this loss is transferred to the monopolist in the form of profit.

Answer to Question 2

b