3. The patent system, which provides innovators a temporary monopoly over a newl

ID: 1226840 • Letter: 3

Question

3. The patent system, which provides innovators a temporary monopoly over a newly invented good, acts as a

a. direct positive incentive.

b. direct negative incentive.

c. indirect positive incentive.

d. indirect negative incentive.

e. does not provide an incentive.

4. How are changes in opportunity cost related to decision-making behavior?

a. The lower the opportunity cost of doing an activity X, the more likely activity X will be done.

b. The higher the opportunity cost of doing activity X, the more likely activity X will be done.

c. Changes in the opportunity cost play no role in decision-making.

d. The lower the opportunity cost of doing activity Y, the more likely activity X will be done.

e. The higher the opportunity cost of doing activity Y, the less likely activity X will be done.

5. Why would economists find it surprising if the CEO of a large company does his or her own housework?

a. The opportunity cost of CEO’s time is quite high because they have an abundance of time to spend on housework.

b. The opportunity cost of CEO’s time is quite low because they have a scarcity of time to spend on housework.

c. The opportunity cost of CEO’s time is quite high because they thoroughly enjoy housework.

d. The opportunity cost of CEO’s time is quite high because they have a scarcity of time to spend on housework.

e. The opportunity cost of a CEO’s time is equal to that of everyone else that works at the same company.

3. a. direct positive incentive.Because due to patent nobody else can use his invention without his permission.

4. b. The higher the opportunity cost of doing activity X, the more likely activity X will be done.

5. d. The opportunity cost of CEO’s time is quite high because they have a scarcity of time to spend on housework.

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