A monopoly has produced a product with a patent for the last few years. The patent is going to expire. What will happen after the patent expires?

Question

Quizplus · Accepted Answer

When the patent of a product expires, other firms can legally enter the market and produce the same product, reducing the monopolist's market share. Therefore, some firms will enter the industry, leading to increased competition and potentially lower prices for consumers. The monopolist may also need to adapt to the competition and innovate their product to maintain their market share. Choice A is incorrect because if the incumbent were to leave the market, it would no longer be a monopoly. Choice B is unlikely because the monopolist's ability to maintain high prices is dependent on restricting entry into the market, which is not possible once the patent expires.

A Monopoly Has Produced a Product with a Patent for the Last