Week 5 Innovation :

Question 1

What is an Invention Compared to a innovation

Answer 1

Invention - a new product or improved process of making products

Innovation - commercialisation and bringing an invention to the market

Question 2

Consumption of public goods and pure public goods ?

Answer 2

Public - goods often under provided due to their non - excludability
Pure public goods - extreme case of positive externalities.

Question 3

Whats an externality ?

Answer 3

Effect related to the production / consumption of a good that falls on people who are not the producers or consumers
Positive –> good effect on the market E.g : Education

Question 4

what’s a Patent :

Answer 4

Provide an inventor with exclusive rights to a new invention.

This excludability produces an incentive to innovate : inc. in dynamic efficiency

Restricts use of non - rival ideas and technologies : dec. in static efficiency

Question 5

Problems with patents ?

Answer 5

They don’t always work -
Pharmacy / inventors of certain cures can charge whatever you want

Question 6

What externalities do Subsidies provide ?

Answer 6

Goods can create positive externalities and are under supplied.