The Patent System

question 127

Multiple Choice

The patent system

• A) acts as a direct positive incentive.
• B) acts as a direct negative incentive.
• C) acts as an indirect positive incentive.
• D) acts as an indirect negative incentive.
• E) does not provide an incentive.

---

Definitions:

Sunk Cost Fallacy

The misconception that future decisions should be influenced by previously incurred costs that cannot be recovered.

Marginal Cost-Benefit Calculations

The process of evaluating whether the additional benefits of an action or investment outweigh its additional costs.

Average Fixed Costs

The total fixed costs of production divided by the quantity of output produced, representing how fixed costs spread out over units of output as production increases.

Total Costs

Total costs are the sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.