Final answer:
The economic benefit of a patent or copyright must be balanced against the cost of temporary monopoly, allowing inventors to have enough incentive for innovation while considering the positive externalities and wider social benefits of their inventions.
Step-by-step explanation:
The economic benefit of a patent or copyright must be balanced against the cost of temporary monopoly (option D). This balance is necessary because while a patent grants the inventor exclusive rights to benefit from their invention, it also creates a temporary monopoly that may limit access to the good and potentially slow the diffusion of technology. Intellectual property law aims to strike a balance between providing enough incentive for innovation (private benefits) and the wider social benefits that arise from the positive externalities of that innovation, such as spillovers that others in society can enjoy.
Private firms may underinvest in research and technology because the private profits are only a portion of the overall social benefits. Thus, patents and copyrights help ensure that inventors can capture a greater share of the overall social benefits, incentivizing them to invest in new good inventions or creations. However, if the duration or breadth of these protections is too large, it could outweigh the positive externalities and hinder societal benefit, justifying a balance between these factors.