Author Question: Suppose that it would cost a firm $10 million to develop a new drug. In the absence of a patent, ... (Read 37 times)

asd123 · **on:** Jul 20, 2019

Suppose that it would cost a firm $10 million to develop a new drug. In the absence of a patent, other firms will be able to copy and bring to market a generic equivalent of the drug in three years. In each of these three years, the firm would earn monopoly profits of $3 million. A patent will generate monopoly status for the firm for twenty years. If the government knew this information ahead of time, which of the following is most correct?
◦ The government should not grant a patent to the firm, because monopoly leads to efficiency losses relative to the competitive market.
◦ The government should grant a patent to the firm, because the firm would not produce the drug at all without a patent.
◦ The government should not grant a patent to the firm, because the firm would earn monopoly profits for three years even without the patent.
◦ The government should grant a patent to the firm, because even with a patent the firm will not earn a monopoly profits.

ashely1112 · **Reply #1 on:** Jul 20, 2019

A FREE account is required to view all solutions!

Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.

Answer Preview

Only 50% of students answer this correctly