Question

What is the usual rationale for governments to issue monopoly-promoting licens es to firms providing services such as trash collection?

a.public safety

b.increased customer choice

c.better-quality services

d.economies of scale

e.lower risk for investors in the firms

Answer 1

The correct answer is letter "D": economies of scale.

Step-by-step explanation:

Economies of scale imply production becomes more productive as the number of products produced increases. In most cases, businesses that reach economies of scale, by increasing production, lower the average cost of their goods. In economies of scale, each product's cost can depend on the size of the industry or the size of an individual firm.

Thus, governments would provide monopoly licenses to trash collectors so they can specialize in their performance by being the only organization in charge of that task in the market.

Answer 2

d. Economies of Scale

Step-by-step explanation:

The correct answer is d. Economies of Scale. Government usually look for economies of scale for services such as trash collection to save tax payers money which can be spent on more expensive services which are for the betterment of the country as a whole.

For services like trash collection where the quality is generally standard the service provider is selected who provides the service for the lowest which means Economies of Scale.