ECONOMICS AND LAW

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Economics

Pricing Commonly Owned Complementary Products

Pricing of commonly owned complimentary products is a method whereby one of the complimentary products is priced in a manner that facilitates maximization of sales volume. This usually happens without cost or profit considerations and is aimed at stimulating the demand of the other product (Desai, 2012). The main purpose of this type of pricing is to generate a sustainable level of profit that can favorably cover the losses sustained by the other product (Pride & Ferrell, 2010).

In the case of the hospital which needs to raise adequate capital for refurbishment, it is almost impossible for the bank to lend it more cash based on the existence of loan being repaid. Most lease renegotiations are to the disadvantages of lease holders. This is in the form of granting additional rights to the lessee and this can consequently lead to loss on an opportunity for additional rent payments by the private investors.

Therefore, in as much as the sale and lease back contract can help the hospital reduce its debts, it has its fair share of disadvantages and in this regard needs to be wholly be renegotiated if not avoided. In this regard, the concerns that I have about the sale and lease back contract is that it hinders the hospital from earning revenue from rent payments by private investors. This discourages its ability to comfortably repay the loan due to reduced and limited opportunities. Besides, the contract is not favorable to lease holders.

Software Discrimination

The values placed on the company’s versions of software by the home users are 175 dollars and 150 dollars for full featured version and disabled version respectively and commercial users at 225 dollars and 200 dollars for full featured version and disabled version respectively. Based on the equal amount of both users and the inability of the marketing department to distinguish between the two users, the most profitable strategy depends on the nature of products and the marginal costs involved (Johnston, 2003).

In a case of zero marginal cost, there is an implication of a situation whereby an additional unit can be produced without increasing the production costs. This can also happen in the case where the goods are non rivalrous. Therefore, the most profitable pricing strategy is to sell to both groups at a single price.

Law

Question three

A patent is an undivided right granted for an innovation of either a product or a process that facilitates new ways of doing things (Gibbs & HYPERLINK “http://www.google.co.ke/search?tbo=p&tbm=bks&q=inauthor:%22Bob+DeMatteis%22&source=gbs_metadata_r&cad=11” DeMatteis, 2003). For an invention to be patentable, it must be new, non-obvious and useful. Based on this, the patent office should not grant patent for frivolous items. This is because patenting such items lead to loss of competition and thus poor quality. This minimizes the returns that an organization can get from an invention.

Question four

Arguments for such patents imply that patenting any idea gives the inventor a reasonable trade off but other stakeholders believe that there are arguments against patenting frivolous items because to the society they lead to loss of competition since sole rights are granted to a single enterprise. In this regard, the process is justified if only it stimulates the economy and improves the lives of many members of the society. Another argument against patenting such items is the fact that invention is not innovation and usually several people who are involved the process fall by the way side as the product or idea becomes recognized (Leonard, 1997). In the case of frivolous inventions or inventions on frivolous items, there is no maximization of returns. This is because in most cases the frivolous items might discourage the combination of worthy inventions that can help yield useful and beneficial products and processes.

Conclusion

Based on the facts above the patent office should not grant patents for frivolous items because patenting on such sloppy standards increases litigation which results into high transaction costs. Therefore, an end to granting patents on frivolous items serves as a blessing to several online businesses and a good encouragement for innovation (Christopher et al, 2001).

References

Andy Gibbs, B. DeMatteis. (2003). Essentials of Patents. New Jersey: John Wiley & Son.

Christopher D. Gerrard, M. A. (2001). Global Public Policies and Programs: Implications for Financing and Evaluation: Proceedings from a World Bank Workshop. Washington D.C: World Bank Publications.

Desai, K. C. (2012). 101 Great Ideas to Boost Your Business. New York: Sterling Publishers Pvt. Ltd.

Johnston, S. A. (2003). Trading Options to Win: Profitable Strategies and Tactics for Any Trader. New Jersey: John Wiley & Sons.

Leonard, B. (1997). General Information Concerning Patents. New York: DIANE Publishing.

William M. Pride, O. C.Ferrell (2010). Marketing. Stamford: Cengage Learning.