2. Suppose the government is considering extending the length of a patent from 20 years to 30 years. How would this change each of the following?
The incentive to invent new products
Extending the length of a patent increases the length of time during which the inventor can reduce the quantity supplied and increase the market price. Since this increases the period of time during which the inventor can earn economic profits from the invention, it increases the incentive to invent new products.
The length of time during which consumers have to pay higher prices
Extending the length of a patent also increases the period of time during which consumers have to pay higher prices. So determining the appropriate length of a patent involves making a trade-off between the desirable incentive for invention and the undesirable high price to consumers.