Explain why, in the absence of a patent, a technical innovation invented and pioneered in one tofu factory will cause the supply curve for the entire tofu industry to shift to the right. What will finally halt the rightward shift? Use supply and demand curves to demonstrate what happens. If the government grants a patent to the one tofu firm that developed the innovation, what type of market for the newly innovated and differentiated product would result (ieperfect competition, monopolistic competition, oligopoly, or monopoly)? Why would the government do this? What would happen to price and consumer surplus under a patent?
Explain why, in the absence of a patent, a technical innovation invented and pioneered in one tofu factory will cause the supply curve for the entire tofu industry to shift to the right. What will finally halt the rightward shift? Use supply and demand curves to demonstrate what happens. If the government grants a patent to the one tofu firm that developed the innovation, what type of market for the newly innovated and differentiated product would result (ieperfect competition, monopolistic competition, oligopoly, or monopoly)? Why would the government do this? What would happen to price and consumer surplus under a patent?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Explain why, in the absence of a patent, a technical innovation invented and pioneered in one tofu factory will cause the supply curve for the entire tofu industry to shift to the right. What will finally halt the rightward shift? Use supply and demand curves to demonstrate what happens. If the government grants a patent to the one tofu firm that developed the innovation, what type of market for the newly innovated and differentiated product would result (ieperfect competition, monopolistic competition , oligopoly, or monopoly )? Why would the government do this? What would happen to price and consumer surplus under a patent?
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