Economist Michael Kremer Offered a Unique Solution to the Problem

question 99

Multiple Choice

Economist Michael Kremer offered a unique solution to the problem of deadweight loss created by monopolies that have control of an innovation. What solution did he propose that would leave the drive to innovate uncompromised?

• A) The government should buy out the innovation created by the monopoly.
• B) The government should sell a patent to the monopoly that creates the innovative technology.
• C) The government should buy out the rights of the patent from the monopoly.
• D) The government should place a price control on the monopoly's product.

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Definitions:

Compounded Semi-annually

A method of calculating interest in which the interest is added to the principal sum twice a year.

Savings

Money that is set aside or stored for future use or emergencies, rather than spent immediately.

Invested

The act of allocating money or capital to an endeavor with the expectation of obtaining an additional income or profit.

Annuity

An annuity is a financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.