Question

The government indirectly influences the level of industry competition with its own barriers to entry. How? The government can restrict entry by

A. regulating the size of profits that firms can earn.
B. granting patents to firms with new inventions.
C. reducing the duration of patents on inventions.
D. preventing lobbyists from influencing policymakers.
E. eliminating tariffs to promote free trade.

Answer 1

Answer: B. granting patents to firms with new inventions.

Step-by-step explanation:

When the Government grants patents to companies that have new inventions, they are creating barriers to entry because other companies will be unable to do the business of the company with the patent as that company's operations in relation to that new invention, will be protected by the Government from being copied.

This will reduce the level of competition in that industry as it will give the new firm a monopoly over the goods or services produced from the patent.