Competition keeps prices lower for consumers. So why do we have patent laws?
What will be an ideal response?
Patent laws are necessary to promote innovation. Without such laws an inventor might spend countless hours and a great deal of money developing a new product, put the product out into the market only to have a competitor copy it without incurring any of the time or costs to develop it. In the long run, this prospect would serve as a mighty disincentive to innovate and so would drastically reduce the supply of new products that come into the market.
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The figure above shows the market for milk. When the efficient quantity of milk is produced, the marginal social cost of the last gallon is
A) $3.50. B) $3.00. C) $2.50. D) $2.00.
An increase in the market interest rate, other things equal, will _____
a. have no effect on investment b. increase the amount invested since the rate of return will be lower c. increase the amount invested because income will increase d. reduce the amount invested because the opportunity costs of investing will be higher e. increase the amount invested because the rate of return will be higher
The presence of negative externalities leads to a misallocation of societal resources because: a. whenever external costs are imposed on outside parties, the good should not be produced at all
b. less of the good than is ideal for society is produced. c. there are some costs associated with production that the producer fails to take into consideration. d. the government always intervenes in markets when negative externalities are present, and the government is inherently inefficient.
According to supply-side fiscal policy, reducing tax rates on wages and profits will:
a. create demand-pull inflation. b. lower the price level but may trigger a recession. c. reduce both unemployment and inflation. d. result in stagflation.