Question: a. Where will profits be higher: When demand for a patented drug is highly inelastic or when demand for a patented drug is highly elastic?

a. Where will profits be higher: When demand for a patented drug is highly inelastic or when demand for a patented drug is highly elastic?
b. Which of those two drugs are more likely to be “important?” Why?
c. Now, consider the lure of profits: If a pharmaceutical company is trying to decide what kind of drugs to research, will it be lured toward inventing drugs with few good substitutes or drugs with many good substitutes?
d. Is your answer to part c similar to what an all-wise, benevolent government agency would do, or is it roughly the opposite of what an all-wise, benevolent government agency would do?

Step by Step Solution

★★★★★

3.35 Rating (161 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Profits are higher when demand is inelastic b The important ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

651-B-E-M-E (2835).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Suppose that Acme Pharmaceutical Company discovers a drug that cures the common cold. Acme has plants in both the United States and Europe and can manufacture the drug on either continent at a...

A clothing store and a jewelry store are located side by side in a small shopping mall. The number of customers who come to the shopping mall intending to shop at either store depends on the amount...

D&F is a distributor of CDs and cassettes that offers benefits such as discount prices and an introductory offer often CDs or cassettes for a penny (not including the shipping and handling costs)....

a. Where will profits be higher: when demand for a patented drug is highly inelastic or when demand for a patented drug is highly elastic? (Figure 13.4 may be helpful.) b. Which of those two drugs...

1.9. a. Where will profits be higher: when demand for a patented drug is highly inelastic or when demand for a patented drug is highly elastic? (Figure 13.4 may be helpful.) b. Which of those two...

From your personal experience, give examples of three goods that (for you) have the following income elasticity of demand: +4, + 2.5,-1 Explain what these coefficients mean. 6.1 Price Elasticity of...

Businesss 7. The next 2 parts to this question give changes that have occurred in the broiler chicken market. For each change in a determinant given, draw in the change that would occur on the...

Question 2 You have been hired by the Commonwealth of Massachusetts to evaluate a welfare reform put in place by the state, which made it very unpleasant to be on welfare by imposing harsh training...

Consider two industries about which you have been given the following information: Industry Herfindahl index value Four-firm concentration ratio A 7500 80 B 1000 20 Interpreter the values of...

plz provide 5 or as many pic for each question that are related to the question below, also it will be nice if u can do it in powerpoint and post screenshot of each question ECON 1101 - Technical...

As indicated by examples in this chapter, earnings announcements by companies are closely followed by, and frequently result in, share price revisions. Two issues should come to mind. First, earnings...

Several risks are paired with potential internal controls in the list below. Place an X in the appropriate column to indicate if the internal control addresses the risk with which it is paired. Be...

Given this dataset of 3 0 animals and thier weight , top speed , life span , habitat , diet and social behavior. write a python code that does the following: 1 - Read animal from the Table. Use Panda...

Briefly explain the need for sales promotion.

Consider two equally wealthy families: one family lives in a relatively poor country and the other lives in a relatively rich country. Which family is more likely to own a mechanical dishwasher? Why?...

A supply and demand model can illustrate the difficulty of keeping a fixed exchange rate: Its much the same as any other price floor. Consider the following fixed exchange rate. Sparta uses a...

At Christmas, five-year-old Gwen runs a massive trade deficit with her parents: She exports only a wrapped candy cane to her parents, but she imports a massive number of video games, dolls, and pairs...

For 3 input AND logic ( AND 3 ) , if and only if A = 1 , B = 1 , C = 1 , the output will be 1 . Base on that definition, the equation is output = ABC, the truth table for AND 3 is: ABC Output 0 0 0 ,...

Help! Espan The following is a list of 14 measurements. 11, -68, 3, 19, 63, 52, 48, -82, 31, -33, -17, 61, 20, -21 Send data to calculator Send data to Excel Suppose that these 14 measurements are...

Implement a function, solve_neq(X, y) that implements Algorithm 1. It should return a Numpy vector containing the model parameter estimates. Steps of the algorithm: Your algorithm should carry out...