Scenario 15-1
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44.
-If a pharmaceutical company discovers a new drug and successfully patents it, patent law gives the firm
A)partial ownership of the right to sell the drug for a limited number of years.
B)partial ownership of the right to sell the drug for an unlimited number of years.
C)sole ownership of the right to sell the drug for a limited number of years.
D)sole ownership of the right to sell the drug for an unlimited number of years.

Question

Quizplus · Accepted Answer

Patent law grants the inventor (in this case, the pharmaceutical company) exclusive rights to sell the drug, but these rights are only for a limited period, typically 20 years from the filing date of the patent application. This is to balance the need to encourage innovation by providing a temporary monopoly with the eventual benefit to the public when the patent expires and the invention enters the public domain.

Scenario 15-1 A Monopoly Firm Maximizes Its Profit by Producing Q =