Which of the following is not a barrier to entry that is created by government? A) Econom
Which of the following is not a barrier to entry that is created by government?
A) Economies of scale.
C) Regulatory restrictions.
22) Which of the following statements regarding patents is false?
A) Patents can help firms gain market power through innovation and then act as a barrier to entry.
B) A firm that has market power as a result of a patent may be more likely to innovate than a perfectly competitive firm.
C) Patents encourage the production of information, which might otherwise be under supplied.
D) Patents can last for an indefinite time period.
23) The requirement that certain professionals possess a license in order to work in a particular market has the effect of reducing the supply of those services, which in turn causes:
A) price and the profits of firms in the market to increase.
B) price and the profits of firms in the market to decrease.
C) price to increase and the profits of firms in the market to decrease.
D) price to decrease and the profits of firms in the market to increase.
24) Which of the following statements regarding the creation of brand loyalty to create and maintain market power is false?
A) Brand loyalty efforts often focus on creating perceived, as opposed to real, differences among products.
B) Brand loyalty can be enhanced by improving the level of service associated with a particular product.
C) One study showed that, in the case of competing beers, brand loyalty has relatively little to do with price.
D) Brand loyalty is determined primarily by real differences in competing products.
25) Which of the following barriers to entry can best explain the continued success of a product that has been shown to be, in some way, harmful to the health of consumers?
B) Consumer lock-in.
C) Brand loyalty.
D) Ownership of an essential resource.
26) Which of the following statements regarding the requirement that a firm be granted a license to operate in a particular market is false?
A) Advocates of licensing maintain that the practice is necessary to maintain quality of service.
B) One of the economic effects of a license requirement is to constrain the available supply of the affected good or service.
C) The requirement that they be licensed ensures that the affected firms will be able to earn a positive economic profit.
D) Relaxing certain licensing requirements should increase the supply of the affected good or service.
27) Which of the following statements regarding generic drugs and name-brand pharmaceuticals is false?
A) Pharmaceutical companies have spent large amounts of time and money in their attempts to reduce competition from generic drugs.
B) Generic drugs have the same chemical content as the corresponding branded drug.
C) On average, a generic drug can reduce U.S. sales of a branded drug by as much as 50 percent in the first six months.
D) Pharmaceutical companies need only to renew the patents they have on certain drugs to protect them from competition by generic drugs.
28) All of the following are considered input barriers to entry except:
A) control of a key raw material by a single firm.
B) the ability to obtain financing for capital projects at more favorable rates than potential competitors.
C) the fact that workers in a particular industry belong to a union.
D) a patent on a specialized type of capital that is needed to produce a particular product.
29) Which of the following is not a type of "lock-in" that acts as a barrier to entry into a particular market?
A) Pricing at or below the average cost of production.
B) Purchases of durable goods.
C) Loyalty programs.
D) Specialized suppliers.
30) In order to use lock-in as a competitive strategy, firm managers should be prepared to do all of the following except:
A) invest in a given base of customers by giving concessions initially.
B) avoid selling complementary products and access to the customer base.
C) be the first to bring a new type of product to market.
D) use loyalty programs as part of an entrenchment strategy.