Which of the Following Is True of Monopolies and Their

question 67

Multiple Choice

Which of the following is true of monopolies and their incentive to innovate?

• A)Monopolies have the incentive to suppress innovation in order to sustain abnormal profits.
• B)Monopolies do not have the incentive to innovate,even in the short run,unless they receive patents for their invention.
• C)Monopolies do not have the incentive to innovate because they will continue to earn zero economic profits even with innovation.
• D)Monopoly firms have the incentive to innovate and introduce new products in order to expand their profit.

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Definitions:

Tariff

A tax imposed by a government on imported or exported goods.

Total Surplus

The sum of consumer and producer surplus, representing the total benefit to society from the production and consumption of goods or services.

Trade

The exchange of goods, services, or both between two or more parties.

Producer Surplus

The difference between the amount a producer is paid for a good or service and the minimum amount they are willing to accept for producing it.