Since Patent Laws Create Monopoly Power in the Short Run

question 131

Multiple Choice

Since patent laws create monopoly power in the short run and thus provide a strong incentive for firms to undertake the risk and effort involved in the development of a technological improvement, we can expect that patent laws

• A) are inefficient.
• B) are damaging to consumer welfare in the long run.
• C) reflect the power of special interests and the impact that they exert on the regulatory policy.
• D) may lead to improved products at a lower cost in the long run.

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Definitions:

Accounts Receivable

Funds that customers are yet to pay to a company for products or services already provided.

Credit Sales

Sales made by a business where payment is delayed, allowing the buyer to purchase goods or services on credit.

Direct Method

A way of reporting cash flows from operating activities that lists major categories of gross cash receipts and gross cash payments.

Depreciation Expense

The distribution of a physical asset's cost throughout its lifespan.