A patent gives an inventor the exclusive legal right to make, use or sell a new invention for a limited time.
Missing Word
patent
A patent is a government grant of exclusive rights to an invention for a limited period, which lets the inventor profit from it before others can copy it.
Category: Intellectual Property
Question 2
A trademark, such as a sportswear company's swoosh logo, is a registered symbol or name that only its owner may use and that can be renewed for as long as it stays in use.
Missing Word
trademark
A trademark legally identifies a particular firm's good, and unlike a patent it can be renewed indefinitely while the firm keeps using it.
Category: Intellectual Property
Question 3
A copyright gives the creator of an original work, such as a song or a novel, legal protection against unauthorized reproduction.
Missing Word
copyright
Copyright protects original works of authorship such as books, music and art from being reproduced or performed without permission.
Category: Intellectual Property
Question 4
Under U.S. law, the exclusive right that protects a new invention normally lasts 20 years.
Missing Word
20
U.S. patents run for 20 years, long enough for the inventor to recover research and development costs before competitors can make cheaper versions.
Category: Intellectual Property
Question 5
Legal protection for a novel generally lasts for the author's lifetime plus 70 years.
Missing Word
70
Copyright protection on creative works generally lasts for the author's life plus 70 years, much longer than the 20-year term of a patent.
Category: Intellectual Property
Question 6
When price is above average total cost, the rectangle on a monopolist's graph whose height is price minus average total cost and whose width is quantity shows the firm's total profit.
Missing Word
profit
Total profit equals total revenue minus total cost, which is the same as (price minus average total cost) times quantity. On the graph that product is a rectangle: its height is the profit per unit and its width is the number of units sold.
Category: Monopoly Profit
Question 7
In the United States, the federal laws that forbid predatory pricing and other practices that unfairly block competition are called antitrust laws.
Missing Word
antitrust
Antitrust laws are the U.S. laws that prohibit practices that unfairly limit competition. Predatory pricing violates them, but it is hard to prove because courts must tell it apart from ordinary price cutting.
Category: Barriers to Entry
Question 8
Removing government controls over the prices and quantities in an industry, as the United States did with airlines and trucking, is called deregulation.
Missing Word
deregulation
Deregulation is the removal of government controls on prices and quantities, which can lower legal barriers to entry and allow more competition.
Category: Barriers to Entry
Question 9
A monopoly is a market in which one firm produces all of the output.
Missing Word
monopoly
A monopoly is the situation in which a single firm is the only producer in a market, so it faces no significant competition from sellers of the same product.
Category: Barriers to Entry
Question 10
A monopolist's total revenue is at its highest at the output where marginal revenue equals 0.
Missing Word
0
Total revenue keeps rising as long as each extra unit adds positive marginal revenue, so it peaks exactly where marginal revenue falls to 0.
Category: Monopoly Revenue
Question 11
Once a monopolist expands output past the point where total revenue peaks, its marginal revenue becomes negative.
Missing Word
negative
Beyond the revenue peak, the price cut needed to sell another unit lowers revenue on all units by more than the new unit brings in, so marginal revenue is negative.
Category: Monopoly Revenue
Question 12
When price falls in a straight line as quantity rises, the marginal revenue line reaches zero at half the quantity at which price reaches zero.
Missing Word
half
For a straight-line demand curve, marginal revenue has the same vertical intercept but falls twice as fast, so it hits the horizontal axis at half the quantity of the demand curve.
Category: Monopoly Revenue
Question 13
After choosing the output where marginal revenue equals marginal cost, a monopolist sets its price by reading up to the demand curve at that output.
Missing Word
demand
The demand curve shows the highest price buyers will pay for each quantity, so it tells the monopolist what price will sell its chosen output.
Category: Profit Maximization
Question 14
When price equals marginal cost, as it does in perfect competition, the market outcome is allocatively efficient.
Missing Word
efficient
Allocative efficiency means the marginal benefit to society equals marginal cost; perfect competition achieves it, while a monopoly's price above marginal cost does not.
Category: Monopoly Efficiency
Question 15
A monopolist whose price is below its average total cost at the best output it can choose suffers a loss, even though it has no rivals.
Missing Word
loss
Being the only seller does not guarantee a profit. If demand is weak enough that price falls short of average total cost even at the output where marginal revenue equals marginal cost, total revenue is less than total cost and the firm takes a loss.
Category: Monopoly Profit