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Author Question: From an economic standpoint, patents reduce efficiency because they serve as a barrier to entry and ... (Read 58 times)

jCorn1234

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on: Jun 29, 2018
From an economic standpoint, patents reduce efficiency because they serve as a barrier to entry and thus limit market competition. Are there any positive economic benefits of patents? Explain.
 
  What will be an ideal response?

Question 2

Harry's Hookahs incurs 700,000 per year in explicit costs and 500,000 in implicit costs. The company earns 1.4 million in revenues and has 3.7 million in net worth. Based on this information, what is the economic profit for Harry's Hookas?
 
  A) 200,000 B) 700,000 C) 900,000 D) 1.1 million


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gstein359

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Yes. Patents provide an incentive for invention and innovation. Research requires resources that have opportunity costs. If research did not lead to expanded profits, little research would be done. Thus, if patents were not available to protect a firm's profits from competition, we would have less innovation.

Answer to Question 2

A


jCorn1234

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Reply 2 on: Jun 29, 2018
YES! Correct, THANKS for helping me on my review

ktidd

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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