Bundle: Managerial Economics: Applications, Strategies And Tactics, 14th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
14th Edition
ISBN: 9781337198196
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 16, Problem 4E
To determine
To Explain: The
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Under which circumstances is patent protection most necessary?
Where information about technological improvements disseminates slowly
Where information about technological improvements disseminates rapidly
In a market with few sellers
Where the cost of research and development is very low
If Congress reduced the period of patent protection from 20 years to 10 years, what would likely happen to the amount of private research and development?
A patent effectively allows a firm to operate as a monopoly while the patent is in effect. Some people argue that the market
power created by patents harms consumers and shouldn't be granted. Others argue that patents are needed to encourage
research and innovation. You can read the article from Forbes to learn more about the history and policy surrounding
patents.
Classify the arguments below as either arguments for patents or arguments against patents.
Arguments For Patents
Arguments Against Patents
Answer Bank
prevents free-riding
encourages higher prices for consumers
prevents competition in the market
research results in a positive externality for society
leads to an ineffient level of production
Chapter 16 Solutions
Bundle: Managerial Economics: Applications, Strategies And Tactics, 14th + Mindtap Economics, 1 Term (6 Months) Printed Access Card
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- Are products with patents a monopoly?Would it be expensive for another company to replicate?arrow_forwardIs the creation of a monopoly power due to the absence of government intervention in the market? If so whyarrow_forwardIf patents, copyrights, and trademarks reduce competition, why does the federal government grant them? What is a natural monopoly? Give two examples locally.arrow_forward
- A product may be provided by a monopolist, but the market may be contestable. How can it be that a monopoly can be as efficient as a perfectly competitive market?arrow_forwardHow do monopoly firms behave in the marketplace? Do they have “power?” Does this power potentially have unintended consequences?arrow_forwardWhat are the advantages and disadvantages of a government owned monopoly?arrow_forward
- Being the only producer in a monopoly market, can a monopolist charge a very high price to maximize profit? Why, or why not?From a societal point of view, can we claim that perfect competition and monopoly are equally efficient? Why, or why not? Explain.arrow_forwardSuppose that a monopolist’s demand curve is P = 9 – 2*Q. Marginal cost is expressed as follows: MC = 0.5*Q. What is the profit-maximizing price (P) the monopoly should set? What would be the output (Q) at that price? What are the current values for the consumer and producer surpluses (CS and PS)? Is it possible to calculate the profit made by the monopolist? If so, how much is it? If not, what other information would be needed to do that? What would be the 2 key options for a government regulator to increase the consumer surplus (CS) and reduce the producer surplus (PS)? Explain briefly the pros and cons of one of the options!arrow_forward
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