One of the Effects of Patents Is to

question 203

Multiple Choice

One of the effects of patents is to

• A) reduce incentives for innovation.
• B) give firms incentives to worry less about minimizing production costs.
• C) temporarily provide the patent owner with monopoly power.
• D) reduce the degree of monopoly power in the short run.

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Definitions:

Inflation Tax

An implicit tax where the government benefits from inflation by reducing the real value of public debt, but it also reduces the purchasing power of money held by the public.

Central Bank

The main monetary authority of a country, which regulates the supply of money and interest rates, aiming to maintain price stability and economic growth.

Inflation

A measure of the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Inflation Rate

The rate at which the overall cost of goods and services in an economy increases over time.