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:

Sales On Account

Transactions where goods or services are sold and payment is to be made at a later date, often recorded as accounts receivable.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

Accounts Receivable Turnover

A financial ratio that measures how effectively a company collects on its credit sales by comparing net credit sales with the average accounts receivable.

Collection Of Receivables

The process businesses use to pursue payments from customers or clients who have purchased goods or services on credit.