Briefly explain how a technology spillover can help society while harming the originator of the technology, and describe the role of patents in the process.
What will be an ideal response?
A technology spillover occurs when society benefits from the development of new technology. Other firms can copy and improve the technological developments of other firms. They can hurt the original firm by sharing in the profits that are earned from the inventor’s ideas. This can lead to a reduction in research and development by firms who do not want others to steal their ideas. However, a patent can protect the original firm so it is allowed to earn most of the profits from its innovations.
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In An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith listed three reasons for productivity to increase with specialization. What are these three reasons?
What will be an ideal response?
The monetary policy weapon least often used by the Fed is ____________.
Fill in the blank(s) with the appropriate word(s).
One reason the Fed tolerates ongoing inflation is because it
a. believes that the CPI understates the actual inflation rate b. believes that the CPI overstates the actual inflation rate c. accepts the idea that a zero inflation rate would make labor markets work more smoothly d. wants to focus more on price stability than on full employment e. is uncertain about the long-run stability of the Phillips curve
Which of the following goods is nonrival in consumption and excludable?
a. Grand Canyon National Park on a rainy, cool day b. Disney World on a rainy, cool day c. a crowded public beach on a sunny, warm day d. White Mountain ski resort on a sunny, mild day