Patents and copyrights are designed to
A)eliminate above-normal profit in the short run
B)move monopoly prices closer to prices that would occur under perfect competition
C)prevent the capitalization of monopoly profit
D)allow a period of above-normal profit to encourage innovation
E)limit a monopoly's rent-seeking activities

Question

Quizplus · Accepted Answer

Patents and copyrights provide exclusive rights to the owner for a certain period of time, allowing them to earn above-normal profits and recoup their investment in innovation. This incentive encourages individuals and firms to invest in research and development, leading to the creation of new products and services that ultimately benefit society as a whole. Once the patent or copyright expires, competition can enter and the market can function closer to perfect competition, which can help move prices closer to their efficient level.

Patents and Copyrights Are Designed to