One Way That Has Been Suggested to Eliminate Deadweight Loss

question 231

Multiple Choice

One way that has been suggested to eliminate deadweight loss from monopoly power without reducing incentives to innovation is to:

• A) have government pay monopolists to reduce their output.
• B) have government pay monopolists to acquire the patent rights.
• C) have government eliminate the patent system.
• D) require that the patent-owners allow competitors to use their innovations.

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Definitions:

Minimum Wage

The lowest legal hourly pay rate that employers can pay to workers.

Recession

A phase of brief economic downturn marked by a decrease in business and manufacturing activities, typically recognized when there's a drop in Gross Domestic Product (GDP) for two consecutive quarters.

Price Ceiling

A government-imposed limit on how high a price can be charged on a product, intended to protect consumers from high prices, but can lead to shortages.

Shortage/Surplus

A market condition where the quantity demanded exceeds the quantity supplied (shortage) or the quantity supplied exceeds the quantity demanded (surplus).