Which of the following best describes how the government sanctions technological monopolies?

• A. By prohibiting all forms of monopoly, including those based on technological innovation
• B. By allowing firms to set prices without any oversight or regulation
• C. By requiring technological monopolies to share their inventions immediately with competitors
• D. By granting patents that provide exclusive rights to produce and sell an invention for a limited period

Answer: (D)

Verified step by step guidance

1. Understand the concept of a technological monopoly: it occurs when a firm has exclusive control over a technology or invention, often due to innovation or patents.
2. Recognize that governments use patents as a legal tool to grant exclusive rights to inventors, allowing them to produce and sell their invention without competition for a limited time.
3. Note that this exclusivity incentivizes innovation by providing temporary monopoly power, rather than prohibiting all monopolies or requiring immediate sharing of inventions.
4. Understand that allowing firms to set prices without oversight is not typically how technological monopolies are sanctioned, as governments often regulate pricing in other monopoly contexts.
5. Conclude that the best description of how governments sanction technological monopolies is through granting patents that provide exclusive rights for a limited period.