The action to be taken by the consumers.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 1, Problem 1DQ

To determine

The action to be taken by the consumers.

Expert Solution & Answer

Explanation of Solution

The consumers were not fully aware about the effects of the prescribed drugs because of which the they did not force the U.S Food and Drug Administration (FDA) to take favorable steps.The economic decisions generally involve opportunity costs mainly due to the scarcity of resources. In the given case, opportunity cost also includes the cost incurred in the decision making for introducing a new drug. If the drug is introduced in a hurry without proper testing and examination, then it may lead to negative consequences.

On the other hand, if some lengthy process is followed to test the drug, then it may result in the death of a person due to the delay in providing timely medication. Hence, there is trade off between the two types of errors while deciding on the introduction of a drug. The errors are as follows:
Type I Error: When there are some side effects of the new drug, which are even greater than the benefits.
Type II Error: When the drug is not introduced despite the urgency associated with releasing it due to various regulations.

The trade off would involve opportunity cost as the FDA has to decide between whether to introduce or not to introduce the drug. The testing process of the drug would involve time and cost. The delay caused due to this may also lead to the deaths of patients.

People pay attention only to the Type I Error and not to the Type II Error. This is primarily because Type I Error is apparent, whereas Type II Error is difficult to identify.The decision to introduce the drug can be justified only when a person is so ill that his survival is purely dependent on that drug only.

Thus, it is difficult for an individual to decide between Type I Error and Type II Error. As a particular individual does not have any expertise in the field; therefore, he or she cannot force the FDA to introduce the drug.

Economics Concept Introduction

Concept introduction:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Identify the two curves shown on the graph, and explain their upward and downward slopes. Why does curve Aintersect the horizontal axis? What is the significance of quantity d? What does erepresent? How would the optimal quantity of information change if the marginal benefit of information increased—that is, if the marginal benefit curve shifted upward?

6. Rent seeking The following graph shows the demand, marginal revenue, and marginal cost curves for a single-price monopolist that produces a drug that helps relieve arthritis pain. Place the grey point (star symbol) in the appropriate location on the graph to indicate the monopoly outcome such that the dashed lines reveal the profit-maximizing price and quantity of a single-price monopolist. Then, use the green rectangle (triangle symbols) to show the profits earned by the monopolist. 18 200 20 16 16 14 PRICE (Dollars per dose) 12 10 10 8 4 2 MC = ATC MR Demand 0 0 5 10 15 20 25 30 35 40 45 50 QUANTITY (Millions of doses per year) Monopoly Outcome Monopoly Profits Suppose that should the patent on this particular drug expire, the market would become perfectly competitive, with new firms immediately entering the market with essentially identical products. Further suppose that in this case the original firm will hire lobbyists and make donations to several key politicians to extend its…

Consider a call option on a stock that does not pay dividends. The stock price is $100 per share, and the risk-free interest rate is 10%. The call strike is $100 (at the money). The stock moves randomly with u=2 and d=0.5. 1. Write the system of equations to replicate the option using A shares and B bonds. 2. Solve the system of equations and determine the number of shares and the number of bonds needed to replicate the option. Show your answer with 4 decimal places (x.xxxx); do not round intermediate calculations. This is easy to do in Excel. A = B = 3. Use A shares and B bonds from the prior question to calculate the premium on the option. Again, do not round intermediate calculations and show your answer with 4 decimal places. Call premium =

Answer 2

Question

Chapter 1, Problem 1DQ

To determine

The action to be taken by the consumers.

Expert Solution & Answer

Explanation of Solution

The consumers were not fully aware about the effects of the prescribed drugs because of which the they did not force the U.S Food and Drug Administration (FDA) to take favorable steps.The economic decisions generally involve opportunity costs mainly due to the scarcity of resources. In the given case, opportunity cost also includes the cost incurred in the decision making for introducing a new drug. If the drug is introduced in a hurry without proper testing and examination, then it may lead to negative consequences.

On the other hand, if some lengthy process is followed to test the drug, then it may result in the death of a person due to the delay in providing timely medication. Hence, there is trade off between the two types of errors while deciding on the introduction of a drug. The errors are as follows:
Type I Error: When there are some side effects of the new drug, which are even greater than the benefits.
Type II Error: When the drug is not introduced despite the urgency associated with releasing it due to various regulations.

The trade off would involve opportunity cost as the FDA has to decide between whether to introduce or not to introduce the drug. The testing process of the drug would involve time and cost. The delay caused due to this may also lead to the deaths of patients.

People pay attention only to the Type I Error and not to the Type II Error. This is primarily because Type I Error is apparent, whereas Type II Error is difficult to identify.The decision to introduce the drug can be justified only when a person is so ill that his survival is purely dependent on that drug only.

Thus, it is difficult for an individual to decide between Type I Error and Type II Error. As a particular individual does not have any expertise in the field; therefore, he or she cannot force the FDA to introduce the drug.

Economics Concept Introduction

Concept introduction:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 1, Problem 1DQ

To determine

The action to be taken by the consumers.

Expert Solution & Answer

Explanation of Solution

The consumers were not fully aware about the effects of the prescribed drugs because of which the they did not force the U.S Food and Drug Administration (FDA) to take favorable steps.The economic decisions generally involve opportunity costs mainly due to the scarcity of resources. In the given case, opportunity cost also includes the cost incurred in the decision making for introducing a new drug. If the drug is introduced in a hurry without proper testing and examination, then it may lead to negative consequences.

On the other hand, if some lengthy process is followed to test the drug, then it may result in the death of a person due to the delay in providing timely medication. Hence, there is trade off between the two types of errors while deciding on the introduction of a drug. The errors are as follows:
Type I Error: When there are some side effects of the new drug, which are even greater than the benefits.
Type II Error: When the drug is not introduced despite the urgency associated with releasing it due to various regulations.

The trade off would involve opportunity cost as the FDA has to decide between whether to introduce or not to introduce the drug. The testing process of the drug would involve time and cost. The delay caused due to this may also lead to the deaths of patients.

People pay attention only to the Type I Error and not to the Type II Error. This is primarily because Type I Error is apparent, whereas Type II Error is difficult to identify.The decision to introduce the drug can be justified only when a person is so ill that his survival is purely dependent on that drug only.

Thus, it is difficult for an individual to decide between Type I Error and Type II Error. As a particular individual does not have any expertise in the field; therefore, he or she cannot force the FDA to introduce the drug.

Economics Concept Introduction

Concept introduction:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 1, Problem 1DQ

To determine

The action to be taken by the consumers.

Expert Solution & Answer

Explanation of Solution

The consumers were not fully aware about the effects of the prescribed drugs because of which the they did not force the U.S Food and Drug Administration (FDA) to take favorable steps.The economic decisions generally involve opportunity costs mainly due to the scarcity of resources. In the given case, opportunity cost also includes the cost incurred in the decision making for introducing a new drug. If the drug is introduced in a hurry without proper testing and examination, then it may lead to negative consequences.

On the other hand, if some lengthy process is followed to test the drug, then it may result in the death of a person due to the delay in providing timely medication. Hence, there is trade off between the two types of errors while deciding on the introduction of a drug. The errors are as follows:
Type I Error: When there are some side effects of the new drug, which are even greater than the benefits.
Type II Error: When the drug is not introduced despite the urgency associated with releasing it due to various regulations.

The trade off would involve opportunity cost as the FDA has to decide between whether to introduce or not to introduce the drug. The testing process of the drug would involve time and cost. The delay caused due to this may also lead to the deaths of patients.

People pay attention only to the Type I Error and not to the Type II Error. This is primarily because Type I Error is apparent, whereas Type II Error is difficult to identify.The decision to introduce the drug can be justified only when a person is so ill that his survival is purely dependent on that drug only.

Thus, it is difficult for an individual to decide between Type I Error and Type II Error. As a particular individual does not have any expertise in the field; therefore, he or she cannot force the FDA to introduce the drug.

Economics Concept Introduction

Concept introduction:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 1, Problem 1DQ

To determine

The action to be taken by the consumers.

Expert Solution & Answer

Explanation of Solution

The consumers were not fully aware about the effects of the prescribed drugs because of which the they did not force the U.S Food and Drug Administration (FDA) to take favorable steps.The economic decisions generally involve opportunity costs mainly due to the scarcity of resources. In the given case, opportunity cost also includes the cost incurred in the decision making for introducing a new drug. If the drug is introduced in a hurry without proper testing and examination, then it may lead to negative consequences.

On the other hand, if some lengthy process is followed to test the drug, then it may result in the death of a person due to the delay in providing timely medication. Hence, there is trade off between the two types of errors while deciding on the introduction of a drug. The errors are as follows:
Type I Error: When there are some side effects of the new drug, which are even greater than the benefits.
Type II Error: When the drug is not introduced despite the urgency associated with releasing it due to various regulations.

The trade off would involve opportunity cost as the FDA has to decide between whether to introduce or not to introduce the drug. The testing process of the drug would involve time and cost. The delay caused due to this may also lead to the deaths of patients.

People pay attention only to the Type I Error and not to the Type II Error. This is primarily because Type I Error is apparent, whereas Type II Error is difficult to identify.The decision to introduce the drug can be justified only when a person is so ill that his survival is purely dependent on that drug only.

Thus, it is difficult for an individual to decide between Type I Error and Type II Error. As a particular individual does not have any expertise in the field; therefore, he or she cannot force the FDA to introduce the drug.

Economics Concept Introduction

Concept introduction:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Answer 6

Chapter 1, Problem 1DQ

To determine

The action to be taken by the consumers.

Expert Solution & Answer

Explanation of Solution

The consumers were not fully aware about the effects of the prescribed drugs because of which the they did not force the U.S Food and Drug Administration (FDA) to take favorable steps.The economic decisions generally involve opportunity costs mainly due to the scarcity of resources. In the given case, opportunity cost also includes the cost incurred in the decision making for introducing a new drug. If the drug is introduced in a hurry without proper testing and examination, then it may lead to negative consequences.

On the other hand, if some lengthy process is followed to test the drug, then it may result in the death of a person due to the delay in providing timely medication. Hence, there is trade off between the two types of errors while deciding on the introduction of a drug. The errors are as follows:
Type I Error: When there are some side effects of the new drug, which are even greater than the benefits.
Type II Error: When the drug is not introduced despite the urgency associated with releasing it due to various regulations.

The trade off would involve opportunity cost as the FDA has to decide between whether to introduce or not to introduce the drug. The testing process of the drug would involve time and cost. The delay caused due to this may also lead to the deaths of patients.

People pay attention only to the Type I Error and not to the Type II Error. This is primarily because Type I Error is apparent, whereas Type II Error is difficult to identify.The decision to introduce the drug can be justified only when a person is so ill that his survival is purely dependent on that drug only.

Thus, it is difficult for an individual to decide between Type I Error and Type II Error. As a particular individual does not have any expertise in the field; therefore, he or she cannot force the FDA to introduce the drug.

Economics Concept Introduction

Concept introduction:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Answer 7

Chapter 1, Problem 1DQ

To determine

The action to be taken by the consumers.

Answer 8

Expert Solution & Answer

Explanation of Solution

The consumers were not fully aware about the effects of the prescribed drugs because of which the they did not force the U.S Food and Drug Administration (FDA) to take favorable steps.The economic decisions generally involve opportunity costs mainly due to the scarcity of resources. In the given case, opportunity cost also includes the cost incurred in the decision making for introducing a new drug. If the drug is introduced in a hurry without proper testing and examination, then it may lead to negative consequences.

On the other hand, if some lengthy process is followed to test the drug, then it may result in the death of a person due to the delay in providing timely medication. Hence, there is trade off between the two types of errors while deciding on the introduction of a drug. The errors are as follows:
Type I Error: When there are some side effects of the new drug, which are even greater than the benefits.
Type II Error: When the drug is not introduced despite the urgency associated with releasing it due to various regulations.

The trade off would involve opportunity cost as the FDA has to decide between whether to introduce or not to introduce the drug. The testing process of the drug would involve time and cost. The delay caused due to this may also lead to the deaths of patients.

People pay attention only to the Type I Error and not to the Type II Error. This is primarily because Type I Error is apparent, whereas Type II Error is difficult to identify.The decision to introduce the drug can be justified only when a person is so ill that his survival is purely dependent on that drug only.

Thus, it is difficult for an individual to decide between Type I Error and Type II Error. As a particular individual does not have any expertise in the field; therefore, he or she cannot force the FDA to introduce the drug.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept introduction:

If one alternative is chosen over another alternative, then there is a cost involved in choosing the alternative i.e. the cost of the foregone alternative. This foregone cost is known as the opportunity cost.

Answer 12

Ch. 1 - Prob. 1DQ Ch. 1 - Prob. 2DQ Ch. 1 - Prob. 3DQ Ch. 1 - Prob. 4DQ Ch. 1 - Prob. 5DQ Ch. 1 - Prob. 6DQ

The action to be taken by the consumers.

The action to be taken by the consumers.

Explanation of Solution

Want to see more full solutions like this?

Chapter 1 Solutions