Proposals to reduce patent length for drugs are sometimes made, but some 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?
Answer to relevant QuestionsIn the examples in Table 10.1, if the movie theater does not price discriminate, it charges either the highest price the college students are willing to pay or the one that the senior citizens are willing to pay. Why ...On July 12, 2012, Hertz charged $ 126.12 to rent a Nissan Altima for one day in New York City, but only $ 55.49 a day in Miami. Is this price discrimination? Explain.Spenser’s Superior Stoves advertises a one- day sale on electric stoves. The ad specifies that no phone orders are accepted and that the purchaser must transport the stove. Why does the firm include these restrictions?Assume that the quantity- discriminating monopoly in panel a of Figure 10.4 can set three prices, depending on the quantity a consumer purchases. The firm’s profit is p = p1Q1 + p2(Q2 - Q1) + p3(Q3 - Q2) – mQ3,where p1 ...A computer hardware firm sells both laptop computers and printers. It has a large inventory of laptops and printers that it wants to sell, so it has no variable production cost. Through the magic of focus groups, their ...
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