A firm is concerned about the possibility of patent infringement and has hired an attorney to review patents. If the attorney is reviewing 100 patents and the marginal cost of reviewing the 100th patent is $40 and the expected marginal benefit of reviewing the 100th patent is $45, which of the following is true?

Question

Quizplus · Accepted Answer

Since the expected marginal benefit of reviewing the 100th patent ($45) is greater than the marginal cost of reviewing it ($40), reviewing more patents is likely to decrease the firm's total cost of infringement by potentially avoiding costly infringements.

A Firm Is Concerned About the Possibility of Patent Infringement