Some people propose reducing the number of years that a drug patent lasts, but their critics argue that such a change would result in even higher prices during the patent period as companies would need to recover drug development costs more quickly. Is this argument valid if drug companies maximize profit? If patent lengths were reduced, then a monopoly drug manufacturer while under the patent OA would not charge higher prices because demand would become steeper. OB. would not charge higher prices because average costs would decrease. OC. would charge higher prices because demand becomes less elastic OD. would charge higher prices because marginal costs would have increased. OE would not charge higher prices because demand would be unchanged.

Some people propose reducing the number of years that a drug patent lasts, but their critics argue that such a change would result in even higher prices during the patent period as companies would need to recover drug development costs more quickly. Is this argument valid if drug companies maximize profit? If patent lengths were reduced, then a monopoly drug manufacturer while under the patent OA would not charge higher prices because demand would become steeper. OB. would not charge higher prices because average costs would decrease. OC. would charge higher prices because demand becomes less elastic OD. would charge higher prices because marginal costs would have increased. OE would not charge higher prices because demand would be unchanged.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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