Which of the following could explain why a firm is a monopoly? Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. Inelastic demand unchecked Economies of scale unchecked Patents unchecked Government licenses unchecked Downsloping market demand

The correct answers are letters "B", "C", and "D": Economies of scale; Patents; Government licenses.

Explanation:

Monopolies are markets in which one company has control over the market of a given good or service. The corporation is the price-setter of the product and is the absolute controller of the supply. Most governments have commercial policies against monopolies because they totally eliminate competition but in some cases, they could be beneficial.

In fact, some governments allow monopolies by providing licenses over the exploitation of minerals that require technology the country itself does not have, for instance. Patents are another example of how these markets are formed. By having complete rights over an invention, the innovator becomes the only legal individual who can use and exploit it at will.

Finally, economies of scale that find their competitive advantage in specializing on the production of a good or render of a service uniquely, can be considered monopolies if the company's processes are difficult or almost impossible to replicate.