Government works to create a competitive marketplace to help foster competition, yet it also awards patents which prevent competition. Why are both competition and the patent system essential to creating a large economic pie?
What will be an ideal response?
Competition drives prices down close to the cost of the resources used in the production of a product, and this encourages more purchases and expands the economic pie. Patents discourage competition, but by creating a captive market for the first person to come up with a good idea, patents encourage entrepreneurs with good ideas to develop those ideas for the marketplace. Without patents, there would be much less invention and innovation.
You might also like to view...
Corporations have the disadvantage of (i) double taxation; (ii) unlimited liability
a. i and ii b. i not ii c. ii not i d. neither i nor ii
Which of the following sets of circumstances is likely to provide the best evidence in support of the theory of efficiency wages?
a. Workers in the market are unskilled and not represented by a union, and their wage exceeds both the equilibrium wage and the minimum wage. b. Workers in the market are highly skilled and not represented by a union, and their wage exceeds the minimum wage. c. Workers in the market are highly skilled and represented by a union, and their wage exceeds the equilibrium wage. d. Employers in the market are known for reducing the workers' wage whenever they get an opportunity to do so.