A government wants to stimulate research and development and must choose between two policies to do so. The first one consists of increasing the length of the patent from 17 to 18 years, while the relevant interest rate is projected to stay at 7%. The second policy would leave patent length at 17 years, but reduce the interest rate from 7% to 6%. Say the inverse annual demand for the yet-to-be invented new good is p = 100 - 2Q, is constant over the years, and marginal cost is constant at 20. Which policy is more effective? Do you need all the information above to answer that question? Begin by normalizing the monopoly profits at $1 per year for the length of the patent (this will make it easier). Show your work