Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Question
Chapter 16, Problem 11IP
(a)
To determine
Advantage of prizes of patents.
(b)
To determine
Cost of prizes over patents.
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Students have asked these similar questions
Which of the following are examples of how patents are not always a perfect way to encourage innovation:
Group of answer choices
patents in the U.S. do not last very long.
it is very expensive to apply for a patent
not every new idea can be protected with a patent or copyright.
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
1. A U.S. patent for the drug that most effectively treats HIV prevents other drug companies from producing a comparable substitute for patients.
a. What is the effect of patent protection on the demand for a drug? How does the shape of the demand curve differ before and after a patent has expired? Support your explanation with a graph.
b.Demand curves respond to preferences, income, and costs of substitute and complements. Discuss how these factors determine a country’s demand for HIV treatments. How might the effects of the patent protection differ across countries?
Chapter 16 Solutions
Microeconomics
Ch. 16.1 - Prob. 1QCh. 16.1 - Prob. 2QCh. 16.1 - Prob. 3QCh. 16.1 - Prob. 4QCh. 16.1 - Prob. 5QCh. 16.1 - Prob. 6QCh. 16.1 - Prob. 7QCh. 16.1 - Prob. 8QCh. 16.1 - Prob. 9QCh. 16.1 - Prob. 10Q
Ch. 16 - Prob. 1QECh. 16 - Prob. 2QECh. 16 - Prob. 3QECh. 16 - Prob. 4QECh. 16 - Prob. 5QECh. 16 - Prob. 6QECh. 16 - Prob. 7QECh. 16 - Prob. 8QECh. 16 - Prob. 9QECh. 16 - Prob. 10QECh. 16 - Prob. 11QECh. 16 - Prob. 12QECh. 16 - Prob. 1QAPCh. 16 - Prob. 2QAPCh. 16 - Prob. 3QAPCh. 16 - Prob. 4QAPCh. 16 - Prob. 5QAPCh. 16 - Prob. 6QAPCh. 16 - Prob. 1IPCh. 16 - Prob. 2IPCh. 16 - Prob. 3IPCh. 16 - Prob. 4IPCh. 16 - Prob. 5IPCh. 16 - Prob. 6IPCh. 16 - Prob. 7IPCh. 16 - Prob. 8IPCh. 16 - Prob. 9IPCh. 16 - Prob. 10IPCh. 16 - Prob. 11IP
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Similar questions
- If patents reduce competition, why does the federal government grant them? The federal government grants patents A. to increase the number of close substitutes available. B. to prevent network externalities. C. to create natural monopolies. D. to encourage firms to collude. E. to encourage firms to spend money on research to create new products.arrow_forwardUnder 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 lowarrow_forwardGive typing answer with explanation and conclusion When a pharmaceutical company discovers a new drug, patent law gives it market power by guaranteeing: Question 7 options: sole ownership of the right to sell the drug for a limited number of years. partial ownership of the right to sell the drug for an unlimited number of years. sole ownership of the right to sell the drug for an unlimited number of years. partial ownership of the right to sell the?arrow_forward
- 1. Patents A. are a form of trade secret. B. create monopoly power. C. always increase total welfare. D. reduce deadweight loss. 2. An example of an essential facility is A. U.S. Route 66. B. your local pizza parlor. C. the telephone line into your house. D. the Golden Gate Bridge.arrow_forwardHow can countries control Monopoly power using public policy or law?arrow_forwardPatent for NoSmak. A potential new drug. NoSmak, cures lip-smacking with one dose, but research and development would cost $50 million. The monopoly profit (earned while a single firm produces the product) will be $5 million per year. After a patent expires, the original developer of the drug will have sufficient brand loyalty to earn $2 million per year for another 10 years. a. What is the shortest patent length required to induce a firm to develop the drug? years. (Enter your response as an integer)arrow_forward
- What Is Patents and Intellectual Property?arrow_forwardReasons why intellectual property laws might hinder innovation in some cases?arrow_forwardIf 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?arrow_forward
- Exhibit 12.4 The Market Demand Curve for Claritin Price $8 With patent protection from the government, the demand curve that Schering-Plough faces for its sales of Claritin is the entire market. For example, if Schering-Plough chose a price of $4, then it would be able to sell 400 million units, but the demand curve shows that if it chose a price of $6 or higher, it wouldn't sell any Claritin, despite having a monopoly. 7 4 3 2 DClaritin 1 Let's assume/lestimate: What would the market 100 200 300 400 500 600 700 800 price and the quantity be under perfect competition? Demand: p=7-x/150 Quantity (in millions of pills) Cost = 1*x %3D And what for the Marginal Cost c'=1 monopoly?arrow_forwardExamples of this market from uae or Gcc countries : 1- competitive market: 2-monopoly : 3-monopolistic competition : 4-oligopoly:arrow_forwardAll barriers to entry are not created through market conditions. Barriers to entry, such as patents, licenses, or international trade restrictions, may be government imposed. How do government–imposed barriers such as patents impact consumers and suppliers in these markets?arrow_forward
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