Question 1

When a firm has been granted a trademark,which grants legal protection against other firms using the name of the product that has been granted the trademark,the firm

Accepted Answer

Even with a trademark, there is a risk that the name may become too common and lose its association with the specific company. This is known as trademark dilution, and it can weaken the trademark's legal protection. Therefore, the firm still needs to monitor and enforce the use of its trademark to maintain its distinctiveness and legal protection.

Question 2

Which of the following is true of trademarks?

Accepted Answer

A successful trademark is one that allows consumers to immediately identify the source or producer of the product. This helps in building brand loyalty and creates a unique identity for the product or service. Option A is incorrect as a successful trademark should not become a generic name for a product as it can lead to the loss of trademark protection. Option C and D are incorrect as trademarks only provide protection against the use of similar marks by other firms in the same industry, but it does not prevent other firms from producing or selling similar products.

Question 3

Governments grant patents to encourage

Accepted Answer

Patents provide exclusive rights to inventors for a limited period, which encourages research and development on new products. This, in turn, promotes innovation and technological progress, leading to economic growth and societal benefits.

Question 4

A patent

Accepted Answer

A patent gives a firm the exclusive right to a new product for a period of 20 years from the date the product is invented. It does not apply to books, films, or music, and is not limited to the inventor's lifetime.

Question 5

The 10-year protection period from generic competition for drug manufacturers is a form of

Accepted Answer

The 10-year protection period from generic competition for drug manufacturers refers to a patent. A patent is a form of intellectual property that gives the patent holder exclusive rights to prevent others from making, using, or selling an invention for a certain period of time, usually 20 years from the filing date of the patent application. In the case of pharmaceuticals, the patent holder is granted a 10-year exclusivity period in which no generic versions of the drug can be produced and sold. This is meant to give the patent holder time to recoup their investment in research and development and generate profits before facing competition from cheaper generic alternatives.

Question 6

A patent or copyright is a barrier to entry based on

Accepted Answer

A patent or copyright provides legal protection to a producer, preventing others from copying or reproducing their product without permission. This creates a barrier to entry for potential competitors who may not have the ability to develop a similar product or obtain the necessary legal protection. This is an example of government action to protect a producer.

Question 7

Which of the following can a firm use to defend a successful product's brand name?

Accepted Answer

A trademark grants exclusive rights to use a brand name, logo, or slogan for a particular product or service. This would allow the firm to prevent other firms from using the same or similar name for their products, protecting the successful product's brand name. Patents are used to protect inventions, not brand names. Advertising and copyright do not provide legal protection against others using the same or similar brand name.

Question 8

Many biologic drug manufacturers are pushing for patent protection to be extended to 12 years before generics are allowed to be introduced to the market.This reflects which of the following barriers to entry?

Accepted Answer

The barrier to entry in this case is government action, as the push for extended patent protection is a result of lobbying by biologic drug manufacturers and potential government legislation. This barrier limits competition from generics and maintains higher profits for the original drug manufacturer.

Question 9

Which of the following is a disadvantage of trademarking a firm's product?

Accepted Answer

If a trademark becomes so widely used to denote a particular type of product that it also becomes a generic term, it may no longer be legally protected as a brand name. This can lead to the loss of the trademark's ability to differentiate and convey information about the firm's product, ultimately affecting its brand value.

Question 10

Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale.The main reason for the elimination of profits is

Accepted Answer

After 20 years, the patent protection provided to the original producer of the drug ends, allowing other firms to produce generic versions of the drug. These generic drugs are usually less expensive, which reduces the economic profits of the original producer. As a result, the elimination of profits occurs.

Question 11

For which of the following firms is patent protection of vital importance?

Accepted Answer

Patent protection is of vital importance for pharmaceutical firms because their products are very expensive to develop and they need exclusive selling rights to recoup their investments. Without patent protection, other companies could easily copy their products and sell them at lower prices, undercutting the original company's profits.

Question 12

Governments grant patents to

Accepted Answer

Patents are a form of intellectual property protection granted to inventors. Governments grant patents to incentivize innovation by compensating firms for the costs associated with research and development. Without the potential financial reward offered by patents, firms may be less likely to invest in costly research and development efforts.

Question 13

Ordinarily,governments attempt to promote competition in markets.Why do governments use patents to block entry into some markets when this prohibits competition?

Accepted Answer

Patents provide a temporary monopoly to the inventor, which allows them to recoup their investment in research and development. This encourages firms to spend money on research necessary to create new products. Once the patent expires, competition can enter the market and drive prices down. This promotes both innovation and competition in the long run.

Question 14

When the government wants to give an exclusive right to one firm to produce a product,it

Accepted Answer

Granting a patent or copyright is the legal way for the government to provide an exclusive right to produce a product or an idea. This protects the intellectual property rights of the inventor or the creator, which will encourage more innovation and creativity. Tariffs and quotas are trade policies that restrict foreign competition, while antitrust laws aim to promote competition and prevent monopolies.

Question 15

One reason patent protection is vitally important to pharmaceutical firms is

Accepted Answer

The approval process for new drugs through the Food and Drug Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process. Without patent protection, pharmaceutical firms would have to compete with cheaper generic versions of their drugs as soon as they hit the market, leaving them unable to recoup the costs incurred during the research and development phase. This would disincentivize research and development, leading to fewer new drugs being developed and ultimately a diminished healthcare system. Therefore, patent protection is vitally important to pharmaceutical firms.

Question 16

________ describes the actions a firm takes to maintain the differentiation of its product over time.

Accepted Answer

Brand management refers to the actions taken by a firm to maintain the differentiation of its product over time. This includes strategies for maintaining consistent quality, developing brand loyalty, and protecting brand reputation. Product differentiation alone does not necessarily address the ongoing actions taken to maintain this differentiation. Aggressive marketing and advertising may be part of the overall branding strategy, but they do not encompass all aspects of brand management.

Question 17

Experience with patents in the pharmaceutical industry shows that when patents on drugs expire,

Accepted Answer

When patents on drugs expire, other firms are free to produce chemically identical drugs. This increases competition and reduces the profits earned by firms that received patents. As a result, prices of the drugs are likely to decrease due to increased competition. While some firms may seek additional patent protection by making cosmetic changes to the drug, this is not always successful and does not necessarily result in continued high prices. Additionally, patient preference for brand-name drugs may play a role in sales, but this is not always the case and does not necessarily result in continued high prices.

Question 18

A successful trademark is one that becomes a generic name for a product,for example,'Kleenex' has become a generic term for tissues.

Accepted Answer

The answer of A successful trademark is one that becomes...

Question 19

A trademark is

Accepted Answer

A trademark is a distinguishing attribute such as a sign or logo that allows a firm to uniquely identify its product. It grants protection to the owner against unauthorized use by others, thus ensuring that consumers can easily identify and differentiate between similar products in the market.

Question 20

Most pharmaceutical firms selling prescription drugs continue to earn economic profits long after the patents on the prescription drugs expire because they have established a strong foothold in the market.

Accepted Answer

The answer of Most pharmaceutical firms selling prescription drugs continue...

Quiz 14: Government Intervention in the Market