In 2-3 paragraphs, respond to the following. Your initial post should be substantive and be supported by course concepts. Your initial post is due by Wednesday to allow other students to respond.
Based on the readings, do you think that minimum wage laws affect overall poverty? Explain.
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13.2 How Governments Can Encourage Innovation - Principles of Microeconomics 2e | OpenStax Skip to Content Principles of Microeconomics 2e13.2 How Governments Can Encourage Innovation Principles of Microeconomics 2e13.2 How Governments Can Encourage Innovation Table of contents My highlightsPrint Table of contents Preface 1 Welcome to Economics! Introduction 1.1 What Is Economics, and Why Is It Important? 1.2 Microeconomics and Macroeconomics 1.3 How Economists Use Theories and Models to Understand Economic Issues 1.4 How To Organize Economies: An Overview of Economic Systems Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions 2 Choice in a World of Scarcity Introduction to Choice in a World of Scarcity 2.1 How Individuals Make Choices Based on Their Budget Constraint 2.2 The Production Possibilities Frontier and Social Choices 2.3 Confronting Objections to the Economic Approach Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 3 Demand and Supply Introduction to Demand and Supply 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services 3.2 Shifts in Demand and Supply for Goods and Services 3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process 3.4 Price Ceilings and Price Floors 3.5 Demand, Supply, and Efficiency Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 4 Labor and Financial Markets Introduction to Labor and Financial Markets 4.1 Demand and Supply at Work in Labor Markets 4.2 Demand and Supply in Financial Markets 4.3 The Market System as an Efficient Mechanism for Information Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 5 Elasticity Introduction to Elasticity 5.1 Price Elasticity of Demand and Price Elasticity of Supply 5.2 Polar Cases of Elasticity and Constant Elasticity 5.3 Elasticity and Pricing 5.4 Elasticity in Areas Other Than Price Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 6 Consumer Choices Introduction to Consumer Choices 6.1 Consumption Choices 6.2 How Changes in Income and Prices Affect Consumption Choices 6.3 Behavioral Economics: An Alternative Framework for Consumer Choice Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 7 Production, Costs, and Industry Structure Introduction to Production, Costs, and Industry Structure 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit 7.2 Production in the Short Run 7.3 Costs in the Short Run 7.4 Production in the Long Run 7.5 Costs in the Long Run Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 8 Perfect Competition Introduction to Perfect Competition 8.1 Perfect Competition and Why It Matters 8.2 How Perfectly Competitive Firms Make Output Decisions 8.3 Entry and Exit Decisions in the Long Run 8.4 Efficiency in Perfectly Competitive Markets Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 9 Monopoly Introduction to a Monopoly 9.1 How Monopolies Form: Barriers to Entry 9.2 How a Profit-Maximizing Monopoly Chooses Output and Price Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 10 Monopolistic Competition and Oligopoly Introduction to Monopolistic Competition and Oligopoly 10.1 Monopolistic Competition 10.2 Oligopoly Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 11 Monopoly and Antitrust Policy Introduction to Monopoly and Antitrust Policy 11.1 Corporate Mergers 11.2 Regulating Anticompetitive Behavior 11.3 Regulating Natural Monopolies 11.4 The Great Deregulation Experiment Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 12 Environmental Protection and Negative Externalities Introduction to Environmental Protection and Negative Externalities 12.1 The Economics of Pollution 12.2 Command-and-Control Regulation 12.3 Market-Oriented Environmental Tools 12.4 The Benefits and Costs of U.S. Environmental Laws 12.5 International Environmental Issues 12.6 The Tradeoff between Economic Output and Environmental Protection Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 13 Positive Externalities and Public Goods Introduction to Positive Externalities and Public Goods 13.1 Why the Private Sector Underinvests in Innovation 13.2 How Governments Can Encourage Innovation 13.3 Public Goods Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 14 Labor Markets and Income Introduction to Labor Markets and Income 14.1 The Theory of Labor Markets 14.2 Wages and Employment in an Imperfectly Competitive Labor Market 14.3 Market Power on the Supply Side of Labor Markets: Unions 14.4 Bilateral Monopoly 14.5 Employment Discrimination 14.6 Immigration Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions 15 Poverty and Economic Inequality Introduction to Poverty and Economic Inequality 15.1 Drawing the Poverty Line 15.2 The Poverty Trap 15.3 The Safety Net 15.4 Income Inequality: Measurement and Causes 15.5 Government Policies to Reduce Income Inequality Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 16 Information, Risk, and Insurance Introduction to Information, Risk, and Insurance 16.1 The Problem of Imperfect Information and Asymmetric Information 16.2 Insurance and Imperfect Information Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 17 Financial Markets Introduction to Financial Markets 17.1 How Businesses Raise Financial Capital 17.2 How Households Supply Financial Capital 17.3 How to Accumulate Personal Wealth Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 18 Public Economy Introduction to Public Economy 18.1 Voter Participation and Costs of Elections 18.2 Special Interest Politics 18.3 Flaws in the Democratic System of Government Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 19 International Trade Introduction to International Trade 19.1 Absolute and Comparative Advantage 19.2 What Happens When a Country Has an Absolute Advantage in All Goods 19.3 Intra-industry Trade between Similar Economies 19.4 The Benefits of Reducing Barriers to International Trade Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 20 Globalization and Protectionism Introduction to Globalization and Protectionism 20.1 Protectionism: An Indirect Subsidy from Consumers to Producers 20.2 International Trade and Its Effects on Jobs, Wages, and Working Conditions 20.3 Arguments in Support of Restricting Imports 20.4 How Governments Enact Trade Policy: Globally, Regionally, and Nationally 20.5 The Tradeoffs of Trade Policy Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems A | The Use of Mathematics in Principles of Economics B | Indifference Curves C | Present Discounted Value Answer Key Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 References Index By the end of this section, you will be able to: Explain the effects of intellectual property rights on social and private rates of return. Identify three U.S. Government policies and explain how they encourage innovation A number of different government policies can increase the incentives to innovate, including: guaranteeing intellectual property rights, government assistance with the costs of research and development, and cooperative research ventures between universities and companies. Intellectual Property Rights One way to increase new technology is to guarantee the innovator an exclusive right to that new product or process. Intellectual property rights include patents, which give the inventor the exclusive legal right to make, use, or sell the invention for a limited time, and copyright laws, which give the author an exclusive legal right over works of literature, music, film/video, and pictures. For example, if a pharmaceutical firm has a patent on a new drug, then no other firm can manufacture or sell that drug for 21 years, unless the firm with the patent grants permission. Without a patent, the pharmaceutical firm would have to face competition for any successful products, and could earn no more than a normal rate of profit. With a patent, a firm is able to earn monopoly profits on its product for a period of time—which offers an incentive for research and development. In general, how long can “a period of time” be? The Clear It Up discusses patent and copyright protection timeframes for some works you might know. Clear It Up How long is Mickey Mouse protected from being copied? All patents and copyrights are scheduled to end someday. In 2003, copyright protection for Mickey Mouse was scheduled to run out. Once the copyright had expired, anyone would be able to copy Mickey Mouse cartoons or draw and sell new ones. In 1998, however, Congress passed the Sonny Bono Copyright Term Extension Act. For copyrights owned by companies or other entities, it increased or extended the copyright from 75 years to 95 years after publication. For copyrights owned by individuals, it increased or extended the copyright coverage from 50 years to 70 years after death. Along with protecting Mickey for another 20 years, the copyright extension affected about 400,000 books, movies, and songs. Figure 13.4 illustrates how the total number of patent applications filed with the U.S. Patent and Trademark Office, as well as the total number of patents granted, surged in the mid-1990s with the invention of the internet, and is still going strong today. Figure 13.4 Patents Filed and Granted, 1981–2012 The number of applications filed for patents increased substantially beginning in the 1990s, due in part to the invention of the internet, which has led to many other inventions and to the 1998 Copyright Term Extension Act. (Source: http://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm) While patents provide an incentive to innovate by protecting the innovator, they are not perfect. For example: In countries that already have patents, economic studies show that inventors receive only one-third to one-half of the total economic value of their inventions. In a fast-moving high-technology industry like biotechnology or semiconductor design, patents may be almost irrelevant because technology is advancing so quickly. Not every new idea can be protected with a patent or a copyright—for example, a new way of organizing a factory or a new way of training employees. Patents may sometimes cover too much or be granted too easily. In the early 1970s, Xerox had received over 1,700 patents on various elements of the photocopy machine. Every time Xerox improved the photocopier, it received a patent on the improvement. The 21-year time period for a patent is somewhat arbitrary. Ideally, a patent should cover a long enough period of time for the inventor to earn a good return, but not so long that it allows the inventor to charge a monopoly price permanently. Because patents are imperfect and do not apply well to all situations, alternative methods of improving the rate of return for inventors of new technology are desirable. The following sections describe some of these possible alternative policies. Policy #1: Government Spending on Research and Development If the private sector does not have sufficient incentive to carry out research and development, one possibility is for the government to fund such work directly. Government spending can provide direct financial support for research and development (R&D) conducted at colleges and universities