Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 14, Problem 1.2P
To determine
Reason out why brand-name pharmaceutical manufacturers would want to enter into agreements using the five force model.
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A patent effectively allows a firm to operate as a monopoly while the patent is in effect. Some people argue that the market
power created by patents harms consumers and shouldn't be granted. Others argue that patents are needed to encourage
research and innovation. You can read the article from Forbes to learn more about the history and policy surrounding
patents.
Classify the arguments below as either arguments for patents or arguments against patents.
Arguments For Patents
Arguments Against Patents
Answer Bank
prevents free-riding
encourages higher prices for consumers
prevents competition in the market
research results in a positive externality for society
leads to an ineffient level of production
Question C2
The Australian Competition and Consumer Commission (ACCC) has opened an
investigation regarding collusion between the two major firms producing fire protection
gear for bush firefighters. The firms - Azure Associates and Blue Guard - contend that
they are quantity competitors and that the prices they are charging are a result of an
increase in price by their suppliers.
As part of the case, the ACCC has noted that the Australian firefighters typically purchase
their own protective gear and are thus price takers in the market. Both the ACCC and the
two firms under investigation agree that the market demand can be described by the
inverse demand function:
P(Q)=240-Q,
where Q is the total quantity provided by the two firms (i.e., Q=q₁ + 9B, where is the
9A
amount produced by Azure Associates and q, is the amount produced by Blue Guard).
All parties also agree that the two firms have identical production technologies and that
the two firms have the same constant marginal cost of…
Consider the firm Novo Nordisk and the production of Ozempic, a class of diabetes drugs which can additionally be used to treat weight-loss by mimicking GLP-1 to suppress appetite. At present, the firm has mostly a monopoly on this kind of injectable drug where semaglutide is the key active ingredient. For some context, read the following freely available articles: 1. https://theconversation.com/ozempic-the-miracle-drug-and-the-harmful-idea-of-a-future-without-fat-211661 2. https://fortune.com/europe/2024/03/28/ozempic-maker-novo-nordisk-facing-pressure-as-study-finds-1000-appetite-suppressant-can-be-made-for-just-5/ [or, access via Login to Curtin Library: https://search.ebscohost.com/login.aspx?direct=true&AuthType=sso&db=bsu&AN=176267009&site=ehost-live&custid=s8423239] 3. https://www.usatoday.com/story/news/health/2024/03/29/ozempic-wegovy-weight-loss-diabetes-drug-cost/73125135007/ 4.…
Chapter 14 Solutions
Principles of Economics (12th Edition)
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