Chapter four

[1]- Patent rights are a form of intellectual property designed to remedy ......... problem ( Competition – Incentive – Innovation)
[2]- An inventor can assign their patent rights to another party, such as their employee ( true)
[3]- when the holder of the patent right allows others to use the patented invention in return for a money fee it is called ............
( Selling – Assigning – Licensing)
[4]- A patent right can be sold to another party. (true)
[5]- A patent right can’t be used by other (false)
[6]- the primary purpose of patent rights is .......
A) To remedy innovation problem B) To remedy incentive problem C) to increase competition
[7]- Licensing a patent means giving away the patent rights permanently ( false temporary)
[8]- Patent rights prevent other inventors from using the same invention and copying it. (true)
[9]- What is the relationship between patent rights and market competition ?
A) Patents have no effect on competition B) Patents create perfect competition C) Patents create imperfect competition
[10]- Who can be granted a license to use a patented invention? ( original inventor only- employees only - Anyone willing to pay a fee )
[11]-Patents create monopolies for a period of time equal to the patient’s life.(t)
[12]- Increases in the protection of intellectual property will tend to reduce demand for the information products protected. (true)
[13]- What does the right of first purchase allow the owner of a book to do ?
- A) The right to make unlimited copies of a book B) The right to resell or lend a purchased book - C) The right to publish a book
[14]- The first purchaser of a copyrighted book cannot resell the book.(false)
[15]- the right of first purchase a concern for publishers, because it limits bookseller profits (true)
[16]- What are the rights of fair use in copyright law ?
A) The right to publish a book B) The right to lend a book C) The right to make photocopies for personal use
[17]- Increases in intellectual property protection can increase monopoly waste in information product markets. (true)
[18]- What can be a consequence of depriving book owners of their property rights?
- A) Increased book sales - B) Higher utility of books - C) Reduced utility of books - D) More competition in the market
[19]- What might happen if the rights of fair use were eliminated?
- A) Increase in consumer demand - C) Decrease in the utility of books
- B) Increase in the utility of books - D) No change in the market
[20]- Increased protection of intellectual property reduces the monopoly waste in information product markets. (false)
[21]- Depriving book owners of their rights can make increases in intellectual property protection unprofitable.(true)
[22]- Increasing intellectual property protection can reduce the demand for information products by limiting the utility of those
products. (true)
[23]- Transaction costs associated with intellectual property rights are always stable.(false)
[24]- Higher prices due to copyright protection can discourage consumers from purchasing the product.(true)

[25]- 2 is the ...... a) MC b) AC c)MR d)A&B

[26]- 1 is the ....... a)demand b)MB c) A&B d)none of the previous
[27]- 3 is the .......... a) MC b) AC c)MR d)A&B
[28]- The optimal (efficient) production is Q2 where the MC = MR (false mc=mb)
[29]- MR represents the marginal benefit curve. (false marginal revenue)
[30]-the optimal (efficient) production quantity under perfect competition is Q1 (false Q2)
[31]- Under perfect competition, the price equals the marginal cost (true)
[32]- If Q2 is produced and sold, the monopolist will ............ A) Earn abnormal profits B) Just cover the cost of production
[33]- Where does the monopolist's marginal revenue equal the marginal cost? (Q1 -Q2 -P0 )
[34]- the price charged for the quantity Q2 is P0 (false )
[35]- Which of the following is NOT represented by the horizontal line C? ( Marginal cost - Average cost - Development cost)
[36]- The optimal production quantity in a monopolistic scenario is Q2. (false q1)
[37]- Under perfect competition, the output produced will be Q1. (false)
[38]- the net benefit to society is the sum of consumer surplus and monopoly profit.(true)
[39]- The total surplus in a monopoly is always higher than in perfect competition.(false)
[40]- Q1 is the quantity a profit-seeking monopolist will produce and sell (true)
[41]- The price charged for Q2 under perfect competition equals the marginal cost. (true)
[42]- What happens to marginal benefit as the patent time increases? ( increases - remains constant - decreases )
[43]- The output of the consumer goods produced under monopoly is less than the optimal output. (true)
[44]- What is consumer surplus ?
- A) The difference between the demand curve and the supply curve
- B) The difference between what consumers is willing to pay and what they actually pay
- C) The difference between the price and the cost of production
[45]- Consumer surplus is measured by the area below the demand curve and above the market price line.(true)
[46]- Higher prices due to copyright protection increase monopoly waste.(true)
[47]- What is producer surplus?
- A) The difference between what producers is willing to accept and what they actually receive
- B) The difference between the cost of production and the price
- C) The area below the supply curve and above the demand curve
[48]- Producer surplus is measured by the area above the supply (or marginal cost) curve and below the market price line. (true)
[49]- Without patents, there would be no incentive to create inventions, resulting in zero consumer and producer surpluses. (true)
[50]- What does the area vxP0 represent in the context of a patent-based monopoly? ( Consumer surplus - Producer surplus - Waste to
society )
[51]- What does the area B or P0xzc represent in the context of a patent-based monopoly? ( Consumer surplus - Producer surplus -
Waste to society )
[52]- Patenting is considered a "first-best" solution to the incentive problem. (false second)
[53]- If patents did not exist, both consumer and producer surpluses would be zero. (true)
[54]- Which type of product's non-patentability is explicitly linked to the argument that they are not original products? ( Pharmaceutical
products - Scientific principles – Databases)
[55]- What happens to industry output once a patent runs out ? ( It decreases to Q1 - It increases to Q2 - It remains the same)
[56]- If the patent term is too short, consumers will benefit greatly.(false)
[57]- What is the consequence of a patent term being too long ? ( Reduced innovation - Lower prices for consumers - increased
monopoly waste)
[58]- Marginal cost decreases as the patent time increases. (false)
[59]- the optimal patent term represents the number of years where marginal cost equals marginal benefit (true)
[60]- A patent term that is too long benefits both consumers and inventors equally. (false)
[61]- The optimal patent term is the same for all types of inventions. (false)
[62]- Which of the following is NOT a form of intellectual property ......... ( Patents – Copyright - Trade secrets - Domain names)
[63]- Copyright protects which of the following ? ( Recipes - Works of writing and art - Company logos)
[64]- What happens to a work when its copyright expires ?
A) It remains protected indefinitely B) It falls into the public domain C) It becomes a trade secret
[65]- Trade secrets are primarily protected under Contract law (true)
[66]- What can be an example of a trade secret ? ( published book - company's logo - popular beverage recipe )
[67]- Intellectual property rights always lead to perfect competition. (false)
[68]- A copyright can be sold, leased, or rented. (true)
[69]- Patents, copyrights, and trade secrets are all forms of intellectual property. (true)
[70]- Once a work's copyright expires, it remains protected by intellectual property law. (false)
[71]- All forms of intellectual property tend to create monopoly waste. (true)
[72]- ............ They are protected under contract law (trademark – copyright - trade secret)
[73]- the Trademark protects company logos (true)
[74]- Intellectual property rights are often used to promote competition. (false)
[75]- The longer the period of the patent, the greater the waste from the viewpoint of consumers and society. (true)

[76]- Which area represents the fixed cost of developing the information product? ( TzyM - vyM - xzy - vxT )
[77]- in this figure the demand curve’s positive slope which means raising prices will reduces sales (false)
[78]- What is the consumer surplus when the information product is sold at marginal cost, M? ( TzyM - vyM - vxT )
[79]- What happens to the average fixed cost (AFC) as output increases? ( It increases - It remains constant - It declines toward zero)
[80]- In the given example, the ATC curve being above the demand curve means the product cannot be profitably produced. (true)
[81]- what does the ATC curve represent? (Average Variable Cost - Average Total Cost - Marginal Cost )
[82]- there no output will cover the ATC of the information product because the average total cost curve lies entirely above the demand
curve (t)
[83]- Which of the following is true about the consumers' gain and producers' loss when the information product is sold at marginal
cost? A) Producers' loss is greater than consumers' gain B) Consumers' gain is greater than producers' loss C) Both are equal
[84]- Which category does the information product in this example fall into?
- A) Products that pass both the profit test and cost-benefit test
- B) Products that fail both tests
- C) Products that pass the cost-benefit test but fail the profit test
- D) Products that are unprofitable but beneficial to producers
[85]- Why might price discrimination not be effective for the information product described ?
A) Consumers refuse to pay different prices
B) It leads to a surplus of unsold products
C) Consumers who receive discounts can resell the product
[86]- Volume discounts are an effective way to mitigate the loss for producers in this example. (false)
[87]- What is the primary issue discussed regarding the production of certain information products despite effective intellectual
property rights? - A) High variable costs - B) Low consumer demand - C) High fixed costs
[88]- The consumers' surplus from producing the information product is less than the producers' loss. (false)
[89]- What does the fixed cost in the given example include?
A) The cost of producing the medium - B) The cost of creating the information product - C) The cost of distribution
[90]- What is the outcome for producers if they sell the information product at a higher price?**
- A) Increased total revenue - B) Decreased quantity sold - C) Increased consumer surplus
[91]- What is a "winner-take-all" market?
- A) A market where all producers share profits equally
- B) A market where only the first entrant can dominate and win significant rewards
- C) A market with perfect competition
[91]- An industry with strong economies of scale is called a natural monopoly (true)
[92]- In case of information pollution, the Government should ........
A) Set prices of information products B) Discourage the production C) Encourage the production
[93]- In "winner-take-all" markets, firms may spend too much on product development beyond the point where social benefits equal
costs. (true)
[94]- What is the primary motivation for the frequent updates and new versions of software? (To provide free updates to users - To create
obsolescence )
[95]- In what situation might government policy encourage production of information goods ?
A) When there is significant underproduction
B) When intellectual property rights are weak
C) When there is significant overproduction
[96]- In what case would government policies to discourage the production of information goods be appropriate?
A) When intellectual property rights are weak B) the medium itself is a public good C) When horse-race effects are important
[97]- In markets where intellectual property rights are effective and horse-race effects are important, there is a risk of overproduction
(true)
[98]- The concept of "information pollution" refers to the underproduction of information goods. (False .... over)
[99]- Overproduction of information goods would warrant government discouragement or even restriction of their production. (true)
[100]- What is a characteristic of markets where over production of information goods ?
A) Weak intellectual property rights C) Effective intellectual property rights
B) The medium is a public good d) missing horse-race effects
[101]- What should government policy focus on in markets with significant overproduction of information goods ?
A) Encouraging more production B) Enhancing intellectual property rights C) Discouraging or restricting production
[102]- Overproduction of information goods can lead to "information pollution." (true)
[103]- What indicates that a market for information products may be experiencing oversupply ?
A) Frequent updates that make older versions obsolete B) Stable and consistent product versions C) None of the previous
[104]- Which factor can lead to the underproduction of information products ?
A) Strong intellectual property rights - B) Effective horse-race effects - C) Nonprofit motives being weak