Provide two examples of a government barrier to entry
What will be an ideal response?
1. A patent or copyright which gives an individual or a firm the exclusive right to produce a product for a given period of time, for example, a patents for pharmaceutical drugs such as the anti-depressant, Prozac, manufactured by Eli Lilly.
2. A public franchise which makes it the exclusive legal producer of a good or service, for example, PG&E is the sole provider of gas and electric utilities in Northern California.
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A key finding of the economic analysis of financial structure is that
A) the existence of the free-rider problem for traded securities helps to explain why banks play a predominant role in financing the activities of businesses. B) while free-rider problems limit the extent to which securities markets finance some business activities, nevertheless the majority of funds going to businesses are channeled through securities markets. C) given the great extent to which securities markets are regulated, free-rider problems are not of significant economic consequence in these markets. D) economists do not have a very good explanation for why securities markets are so heavily regulated.
Under imperfect competition, a firm's:
a. demand curve lies below its marginal revenue curve. b. demand curve lies above its marginal revenue curve. c. demand curve coincides with its marginal revenue curve. d. demand curve coincides with its marginal cost curve. e. demand curve coincides with its average cost curve.