A monopoly has produced a product with a patent for the last

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?
(A) The incumbent will leave the market.
(B) The incumbent will retain its status as a monopoly but produce at a lower price.
(C) Some firms will enter the industry.
(D) None of the answers is correct.

Solution

Correct option (C).

When monopolist was holding the patent, no other firm was legally allowed to produce the same product. After patent expires, such legal binding will cease to exist and so, other firms will enter the industry, producing the same good.