36. Number of Sellers: The government has granted a patent to a drug company for an experimental cancer drug. That company is the only firm permitted to sell the drug * (1 Point) Select your answer Many Few a patent to a drug company for an experimental mitted to sell the drug * 37. One

36. Number of Sellers: The government has granted a patent to a drug company for an experimental cancer drug. That company is the only firm permitted to sell the drug * (1 Point) Select your answer Many Few a patent to a drug company for an experimental mitted to sell the drug * 37. One

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter9: Monopoly

Section: Chapter Questions

Problem 1QFR

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List the costs and benefits of the following hypothetical policies: A. The US government offers a $5 billion prize to the first drug company that develops a cure for Alzheimer's disease. B. The patent length for drugs to treat fatal diseases is reduced to five years and all current patents for such drugs that are already in more than five years old instantly expire. C. The European Medicines Agency announces that it will instantly approve new drug applications that have shown any promise in treating Creutzfeld-Jakob disease (also known as mad cow disease), even if there are safety concerns or if the evidence of efficacy is not conclusive. D. The US government allows patients to write themselves prescriptions on weekends, when physicians are typically not available. E. The US government mandates lower out-of-pocket costs on brand-name drugs.
List the costs and benefits of the following hypothetical policies.a. The US government offers a $5 billion prize to the first drug company that develops a cure for Alzheimer’s disease.b. The patent length for drugs to treat fatal diseases is reduced to five years, and all current patents for such drugs that are already more than five years old instantly expire.c. The European Medicines Agency announces that it will instantly approve new drug applications that have shown any promise in treating Creutzfeldt-Jakob disease (also known as mad cow disease), even if there are safety concerns or if the evidence of efficacy is not conclusive.d. The US government allows patients to write themselves prescriptions on weekends, when physicians are typically not available.
Recently, Pfizer and Allergan—the makers of Viagra and Botox, respectively—initiated a $160 billion merger. Pharmaceutical companies tend to spend a greater percentage of sales on R&D activities than other industries. The government encourages these R&D activities by granting companies patents for drugs approved by the Food and Drug Administration. For instance, Allergan spent large sums of money developing its popular wrinkle-removing neurotoxin, Botox, which is currently protected under a patent. Botox sells for about $15 per vial. Calculate the Lerner index if the marginal cost of producing Botox is $1.50 per vial. Does the Lerner index make sense in this situation?
Which one of the following statements is consistent with Sutton's theory? A. All industries have the same relationship between market size and minimum concentration: as market size increases the minimum concentration declines toward zero. B. The inter-industry study cannot discover any robust mechanism that determines market structure. C. All industries have the same relationship between market size and minimum concentration: as market size increases the minimum concentration is bounded above zero. D. Not all industries have the same relationship between market size and minimum concentration: as market size increases, the minimum concentration declines toward zero for some industries; but is bounded above zero for advertising or R&D intensive industries.