Patents grant a temporary monopoly, and can therefore raise drug prices. Given that, why are drug patents beneficial? a If drug prices are too low, consumers will think they are ineffective and won't use them. b Insurance companies want drug prices to be high so they can charge higher premiums to consumers. c Without a patent, a new drug could be easily replicated by competitors, and the innovator would receive no profits. Thus, there would be no incentive to spend effort making the new drug. d Consumers enjoy paying higher prices for drugs that improve their quality of life.

Patents grant a temporary monopoly, and can therefore raise drug prices. Given that, why are drug patents beneficial? a If drug prices are too low, consumers will think they are ineffective and won't use them. b Insurance companies want drug prices to be high so they can charge higher premiums to consumers. c Without a patent, a new drug could be easily replicated by competitors, and the innovator would receive no profits. Thus, there would be no incentive to spend effort making the new drug. d Consumers enjoy paying higher prices for drugs that improve their quality of life.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter9: Monopoly

Section: Chapter Questions

Problem 7SQP

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