Patents stimulate investment _____
A)by giving inventors an incentive to incur the up-front costs of developing new products.
B)by giving tax breaks to inventors and researchers.
C)by guaranteeing an economic profit to a firm from the sale of a new product.
D)by lowering interest rates on loans taken for developing a new product.
E)by covering the total cost of research and development incurred by a start-up firm.

Question

Quizplus · Accepted Answer

Patents provide inventors with a temporary monopoly on their patented technology, which gives them a strong incentive to invest in the up-front costs of developing new products. By giving inventors the exclusive right to use, make, or sell their invention, patents ensure that inventors will be able to recoup their investment in developing new technology through the economic profits generated by their monopoly position. This encourages investment in new and innovative products. The other options listed do not accurately describe the role of patents in stimulating investment.

Patents Stimulate Investment _____