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Which of the following are sources of market power? I. government-issued patents and copyrights II. a Minnesota law requiring all new funeral homes to have an embalming room, which costs upward of $30,000, whether or not it is functional or will be used III. a Portland, Oregon, law that makes it a crime for limousine companies to charge less than $50 per ride

Respuesta :

Answer:

The correct answer is option I.

Explanation:

Market power refers to the situation when a firm can affect the price of its product. There is no market power in a perfectly competitive market.  

Market power generally arises from barriers to entry. There are four barriers to entry,

  • Resource ownership
  • Government regulation
  • Copyrights and patents
  • Startup cost

In the given example, patents and copyrights are an example of a barrier to entry.  

A firm that possesses patents or copyrights for a product, will be able to affect its price as the firms will not be able to produce that product.  

This gives market power to he firm holding patents or copyrights.

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