Question

The monopoly firm has a patent that is about to expire. A new start-up firm has entered the market with a new method and has applied for patent protection. Which of the strategies below make the most economic sense for the monopoly firm?

Answer 1

Answer:

The correct answer to the following question will be "Acquire start-up firm  and Continue production".

Explanation:

• Because of reasonable competition and comparatively low cost, a monopoly company can achieve long-term profit and continue or expand development.
• After some time, a monopoly that persists in stopping the entrance of new companies or firms capable of producing its commodity would see its obstacles bypassed by inventions, and it is, therefore, necessary for a dominant corporation to adapt the business strategy and stay current with industry changes.
• Hence purchasing the start-up company would make good business sense for themselves.