Indicate whether each statement is true or false, and justify your answer.Most economists think that innovation is not random, and that pharmaceutical companies can steer their research toward profit opportunities.
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Indicate whether each statement is true or false, and justify your answer.
Most economists think that innovation is not random, and that pharmaceutical companies can steer their research toward profit opportunities.
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- Most economists think that innovation is not random, and that pharmaceutical companies can steer their research toward profit opportunities.Indicate whether the statement is true or false, and justify your answer.The fact that practicing surgeons who have finished residency earn more than practicing pediatricians implies that the rate of return of choosing surgery exceeds the rate of return of choosing pediatrics for a medical school graduate.Indicate whether the statement is true or false, and justify your answer.Consider the following theory due to Arrow (1963): nonprofits exist because for-profit firms are less trustworthy in the performance of actions that are hard to observe. According to this theory, government regulations requiring hospitals to report data on outcomes should lead to a lower share of nonprofit production in the hospital industry.
- Imperfect competition and moral hazard. Some economists have argued that moral hazard and monopolistic health care markets are two socially inefficient problems that partially cancel each other out. Relative to the optimal level of health care Q∗, how much health care is provided in the presence of moral hazard? Assume perfectly competitive health care markets. Relative to the optimal level of health care Q∗, how much health care is provided in the presence of monopolistic health care markets? Assume no moral hazard. Write a one-sentence defense of the argument that moral hazard and imperfectly competitive health care markets could combine to provide a good level of health care provision Q.In some countries, such as Canada and UK, direct-to-consumer (DTC) advertising for pharmaceutical products is illegal or tightly controlled. Which of the following is NOT a reason why DTC is tightly controlled? Question 7 options: Asymmetric information: consumers are not in a good position to determine if a drug is what they need. DTC makes patients aware of new remedies. DTC can put a strain on doctor-patient relationship when patients demand some drugs that are not necessary or not the best options. DTC have the potential to drive up spending on drugs and exacerbate moral hazard.Why or how can you explain Card and Krueger's findings?
- Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote. Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote.Indicate whether each statement is true or false, and justify your answer.After passage of the Kefauver–Harris Amendment in 1962, the number of new chemical entities introduced into the US market by pharmaceutical companies dropped substantially.The problem of adverse selection in insurance markets means that it is generally a bad deal for companies to offer insurance at the same price for all potential customers. Why then do we observe some insurance companies (such as those selling “trip insurance” that refunds money to people who purchase trips that they are unable to take) do exactly this?
- Suppose that left-handed people are more prone to injury than right-handed people. Lefties have an 80 percent chance of suffering an injury leading to a $1,000 loss (in terms of medical expenses and the monetary equivalent of pain and suffering) but righties have only a 20 percent chance of suffering such an injury. The population contains equal numbers of lefties and righties. Individuals all have logarithmic utility-of-wealth functions and initial wealth of $10,000. Insurance is provided by a monopoly company. a.Compute the “first best” for the monopoly insurer b.Try to characterize the “second best” contracts as well as you can (start from the profit maximization problem and write down the four relevant constraints, point out which constraints matter, which ones don’t, proceed as much as you can, etc.). In addition: assume perfectly competitive insurance market instead of monopoly, and find (i) the first best and (ii) the second-best contracts.Indicate whether the statement is true or false, and justify your answer. 1. In some markets, adverse selection develops over time as customers learn about their own risk levels. 2. The fact that high-risk individuals are usually less risk-averse than low-risk individuals helps counteract adverse selection.Indicate whether each statement is true or false, and justify your answer.If a government wishes to maximize the rate of pharmaceutical innovation, it should offer non-expiring patents to drug companies.
