Question

1a. When the federal government established patent laws, it was ensuring

a. property rights for consumers

b. property rights for schools

c. property rights for entrpreneurs

d. property rights for music

e. property rights for bookstores.

1b.

An economic model is:

A. a complete replication of a market or other economic institution that leaves nothing out.

B. a small plastic replication of a bank or stock market.

C. a simplified representation of an economic concept or institution.

D. always based on complex computer simulations.

E. only applied to large complex problems because the small problems are so simple that they don’t need models.

Answer 1

1) a) Correct choice is Option C. property rights for entrpreneurs

In legal terms patent rights are actually property rights and these are given to encourage research and development so that new products can be innovated. There should be enough protection from competition and that is why other firms are legally restricted to use the same property or technology when it is patented.

b) Correct option is Option C. a simplified representation of an economic concept or institution.

Economic models are made to replicate a real world situation where many other factors are controlled and only the impact of few factors on the model is studied. Restrictions as well as assumptions are gradually relaxed in an economic model.