Some people propose reducing the number of years that a drug patent lasts, but their critics argue that 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.

1. Would not charge higher price because demand would be unchanged.
2. Would not change higher prices because marginal costs would have increased.
3. Would not change higher prices because average costs would be decreased.
4. Would not change higher prices because demand would become flatter.
5. Would not change higher prices because demand would become less elastic.

Answer rating: 100% (QA)

No such an argument is not valid if drug companies maximize profits because in case of drug ... View the full answer