Problem

Imagine that you are managing a small firm and th…

02:05

Problem 28 Hard Difficulty

Intellectual property laws are intended to promote innovation, but some economists, such as Milton
Friedman, have argued that such laws are not desirable. In the United States, there is no intellectual property protection for food recipes or for fashion designs. Considering the state of these two industries, and bearing in mind the discussion of the inefficiency of monopolies, can you think of any reasons why intellectual property laws might hinder innovation in some cases?

Answer

Intellectual properties is basically knowledge and the certain government regulations like patents,
copyrights, trademarks, etc. gives ownership to the innovator or owner of these properties. It is
very easy to copy and idea or concept which somebody else have spent money, time and years
to get but protecting intellectual property also leads to formation of monopoly and these
monopolies lead to market inefficiency because the production is less than competitive
equilibrium while the price is more. Some innovations are fruitful only when maximum production
is done and, in many cases, where the production is reduced from capacity then the innovation
becomes less fruitful and further innovation decreases.

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Principles of Microeconomics for AP® Courses

Chapter 9

Monopoly

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Maryanne F.

December 5, 2020

Imagine that you are managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10% less than the monopolist. Before you

S B.

June 25, 2021

For many years, the Justice Department has tried to break up large firms like IBM, Microsoft, and most recently Google, on the grounds that their large market share made them essentially monopolies. In a global market, where U.S. firms compete with firms

S B.

June 25, 2021

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Watch More Solved Questions in Chapter 9

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Problem 28

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Problem 33

Video Transcript

everyone today will be walking through Problem number 28 from Chapter nine of the textbook, which asks us, in what cases would intellectual property loss hinder innovation? So if we think about this logically, if these laws are too strict or two Athenians, essentially, if they are too weak or too strong, they were definitely hinder innovation. So if they're too weak, then what would happen is that innovation would become less. I'll just give a brief example. If we had weaker pot laws in place, then people would innovate. Loss? Um, that's just a simple matter. That's one end of the spectrum. But on the other end of the spectrum, it could also be too strict, these intellectual property loss or too strong in nature to essentially forceful with how they go about things and what results from this is, examine it a little bit closer. We'll see that too strong intellectual property laws might hinder innovation because then firms just worked. He used too much innovation for only profit. So in the market are firm. Will, often with too strong intellectual property laws, used too much innovation because that's the only way that they can basically make a profit. This is only to get a profit. Really. That's their main source on leads. I mean their main source of inspiration for starting the firm's profits. So goes without saying. But I'll just buried it. We're only doing They're only having too much innovation going on for profit so they can essentially just make more money. There you have it. If intellectual property laws are too weak or too strong on both ends of the spectrum, if they're too extreme essentially than back it results in last innovation are more innovation. So they're your answer. Circled in red. If you guys enjoyed my video explanation, please hit the light. But next to it I hope you all have a nice day. And thanks for tuning in today. I

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