Why Does a Patent Stimulate Research

question 6

Multiple Choice

Why does a patent stimulate research?

• A) Patents give firms time to do research.
• B) Patents give firms the opportunity to recover research costs and thus serve as a profit motive.
• C) Without patents, firms would not research as much.
• D) They don't.

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Definitions:

Unused Capacity

Refers to the available production or service facility space that is not currently being used to generate revenue or produce goods.

Sunk Cost

A cost that has already been incurred and cannot be recovered, which should not influence future business decisions.

Accumulated Depreciation

The total depreciation expense allocated for a tangible asset over its usage period, reducing its book value.

Replacement Equipment

Items purchased to replace older assets within a business, ensuring operational efficiency and continuity.