quanda15 - Chapter 15 1. a. What are the three sources of...

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Practice Questions to accompany Mankiw & Taylor: Economics 1 Chapter 15 1. a. What are the three sources of the barriers to entry that allow a monopoly to remain the sole seller of a product? Answer: A key resource is owned by a single firm (monopoly resource), the government gives a single firm the exclusive right to produce a good (government created monopoly), the costs of production make a single producer more efficient (natural monopoly). b. What is the entry barrier that is the source of the monopoly power for the following products or producers? List some competitors that keep these products or producers from having absolute monopoly power. 1. The UK’s Royal Mail (postal service) 2. Perrier Spring Water 3. Prozac (a brand name drug) 4. DeBeers Diamonds 5. Economics, by N. Gregory Mankiw and Mark P. Taylor (your textbook) Answer: 1. Natural monopoly. E-mail, Fax machines, telephone, private delivery such as Federal Express. 2. Monopoly resource. Other bottled water, soft drinks. 3. Government created monopoly due to a patent. Other drugs for depression, generic drugs when the patent expires. 4. Monopoly resource. Other gems such as emeralds, rubies, sapphires. 5. Government created monopoly due to copyright. Other principles of economics text books. 2.
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quanda15 - Chapter 15 1. a. What are the three sources of...

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