Ordinarily, governments attempt to promote competition in markets. Why do governments use patents to block entry into some markets when this prohibits competition?
A) Patents encourage firms to spend money on research necessary to create new products.
B) Politicians sometimes succumb to pressure from lobbyists to grant favors to businesses for political reasons.
C) Patents are an important source of government revenue.
D) Patents are justified because they are an important means for creating network externalities.
Answer: A
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Of the following, who gains because of tariffs and why?
A) domestic producers of protected goods because they can sell at a higher price B) domestic buyers because they can be sure of buying high-quality products C) foreign producers because they earn more total revenue D) foreign government because they gain more revenue E) domestic buyers because they pay a lower price
Owners claim residual income
Indicate whether the statement is true or false