Final answer:
Patents create market power by preventing other businesses from entering the market, as they act as government-enforced barriers to entry.
Step-by-step explanation:
Patents create market power by preventing other businesses from entering the market. They serve as a government-enforced barrier to entry, protecting the patent holder from direct competition in the production and sale of a patented product or process. This legal protection enables the firm to maintain higher prices and earn potential monopoly profits, as competitors cannot legally offer the same product or technology without permission. A patent does not create economies of scale directly, nor does it make demand more elastic, and it certainly does not eliminate barriers to entry but creates one instead.