Describe the tradeoffs involved when thinking about setting the time over which a patent grants an innovator exclusive monopoly rights.
What will be an ideal response?
Granting monopoly powers through patents implies a legal barrier to entry is erected, giving market power that will then be used to restrict output and raise price. In a static context, this implies a deadweight loss from under production. At the same time, innovations create surplus -- and patents give incentives to innovate. The longer a patent lasts, the greater the incentives to innovate -- but the greater also the static deadweight loss from monopoly power being exercised.
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Refer to Figure 9.2. A movement from point a to point b could be caused by a(n)
A) increase in government spending. B) decrease in the price of oil. C) decrease in taxes. D) decrease in short-run aggregate supply.
Innovations, including new products and services, in financial markets and institutions have made the job of defining the money supply easier
Indicate whether the statement is true or false
In 2008-2010, American policy makers decided to risk
a. higher inflation for the sake of decreasing unemployment. b. higher unemployment to hold down inflation. c. increasing taxes for the sake of reducing the budget deficit. d. reducing government spending for the sake of balancing the budget.
Utility is maximized for the consumption of two goods when: a. the price of the first good equals the price of the second good
b. the marginal utility per dollar spent is equal for both goods consumed. c. the quantity consumed of the first good equals the quantity consumed of the second good. d. the total utility of the first good equals the total utility of the second good.