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Patent for NoSmak. A potential new drug, NoSmak, cures lip-smacking with one dose, but research and development would cost $60 million. The monopoly profit (earned while a single firm produces the product) will be $5 million per year. After a patent expires, the original developer of the drug will have sufficient brand loyalty to earn $2 million per year for another 10 years. a. What is the shortest patent length required to induce a firm to develop the drug? years. (Enter your response as an integer)

Patent for NoSmak. A potential new drug, NoSmak, cures lip-smacking with one dose, but research and development would cost $60 million. The monopoly profit (earned while a single firm produces the product) will be $5 million per year. After a patent expires, the original developer of the drug will have sufficient brand loyalty to earn $2 million per year for another 10 years. a. What is the shortest patent length required to induce a firm to develop the drug? years. (Enter your response as an integer)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Patent for NoSmak. A potential new drug. NoSmak, cures lip-smacking with one dose, but research and development would cost $50 million. The monopoly profit (earned while a single firm produces the product) will be $5 million per year. After a patent expires, the original developer of the drug will have sufficient brand loyalty to earn $2 million per year for another 10 years. a. What is the shortest patent length required to induce a firm to develop the drug? years. (Enter your response as an integer)
Transcribed Image Text:Patent for NoSmak. A potential new drug. NoSmak, cures lip-smacking with one dose, but research and development would cost $50 million. The monopoly profit (earned while a single firm produces the product) will be $5 million per year. After a patent expires, the original developer of the drug will have sufficient brand loyalty to earn $2 million per year for another 10 years. a. What is the shortest patent length required to induce a firm to develop the drug? years. (Enter your response as an integer)
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