Homework Answers
11. A) Since the good is a life saving drug, it is a necessity good. Therefore, both the demand and supply would be inelastic. As the demand and supply would not show much responsiveness to price. When your life is at stake, you will be willing to pay any price for it.
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11. Which of the following market structures best represents the market for a life-saving pharmaceutical drug?...
10. Which of the following best represents the market for national soccer matches, recognizing that suppliers...
10. Which of the following best represents the market for national soccer matches, recognizing that suppliers face a capacity constraint at a set quantity and that consumers do not have close substitutes for this particular good? Demand Quantity Demand Quantity Quantity 11. Which of the following market structures best represents the market for a life-saving pharmaceutical drug? The pharmaceutical industry is characterized by high upfront costs (e.g., research and development, obtaining FDA approval, etc...) and very low per-unit production costs....
. You are the manager of a small pharmaceutical company, Advent Pharmaceuticals, Inc. that received a...
. You are the manager of a small pharmaceutical company, Advent Pharmaceuticals, Inc. that received a patent on a new drug four years ago. Despite strong sales ($200 million last year) and a low marginal cost of producing the product ($0.50 per pill), your company has yet to show profit from selling the drug. This is, in part, due to the high upfront costs of about $2 billion of developing (R&D) and obtaining FDA approval. As an economist working for...
You are the manager of a small pharmaceutical company, Advent Pharmaceuticals, Inc. that received a patent...
You are the manager of a small pharmaceutical company, Advent Pharmaceuticals, Inc. that received a patent on a new drug four years ago. Despite strong sales ($200 million last year) and a low marginal cost of producing the product ($0.50 per pill), your company has yet to show profit from selling the drug. This is, in part, due to the high upfront costs of about $2 billion of developing (R&D) and obtaining FDA approval. As an economist working for Advent,...
2. Assume a pharmaceutical company invented a drug that is more effective in treating (or at...
2. Assume a pharmaceutical company invented a drug that is more effective in treating (or at least life extending) blood cancers and managed to obtain a patent on the drug making the company the sole provider of this blood cancer drug in the market for the next 30 years. Assume in the long-run (i.e.,in 30 years) as the patent expires, given a perfectly elastic long-run supply in the long-run, the competitive price becomes Pc, which also represents the industry’s marginal...
The Ethics of Global Drug Pricing case; Please answer the following questions. 1- What is the...
The Ethics of Global Drug Pricing case; Please answer the following questions. 1- What is the proper balance for pharmaceutical companies between delivering the fiduciary obligation of earning a profit for owners and providing lifesaving or life-extending drugs to customers? How much profit is too much profit and who determines the amount? How does that balance get achieved? 2- Should the United States consider other methods for controlling drug pricing, such as those used in some European countries? Are there...
Which of the following options best describes market structures from the lowest to the highest degree...
Which of the following options best describes market structures from the lowest to the highest degree of market power? Perfect competition, monopolistic competition, oligopoly, monopoly Oligopoly, monopoly, monopolistic competition, perfect competition Monopoly, perfect competition, oligopoly, monopolistic competition Monopolistic competition, oligopoly, monopoly, perfect competition A cable company has determined that the marginal revenue from an additional subscriber is $15, and the marginal cost of providing cable services is $5. Based on this information, what should the company do? Increase the quantity...
Which of the following best describes the condition that leads to a natural monopoly? The firm takes anti-compe...
Which of the following best describes the condition that leads to a natural monopoly? The firm takes anti-competitive actions to keep other firms out. Economies of scale are large relative to quantity demanded in a market. The government prohibits entry into an industry A single firm controls an industry because there are very few customers in the industry occurs when the price of a good changes and consumers have an incentive to consume less of the good with a higher...
1. Which of the following best explains why the number of firms is fixed in the...
1. Which of the following best explains why the number of firms is fixed in the short run in perfect competition? Marginal costs are too high to allow firms to operate profitably. Firms would wait to see how the long run develops. Capital is fixed in the short run. Firms would never want to enter a perfectly competitive industry. 2. Which of the following best explains why the number of firms is fixed in the short run in perfect competition?...
Article A Recent study of productivity in the workplace revealed that workers spend on average eight...
Article A Recent study of productivity in the workplace revealed that workers spend on average eight percent of their workday doing nothing. This statistic takes on greater significance when we find that health problems impact employee productivity loss by an even greater percentage. In light of this discovery, a group of leading experts from the emerging field of health and productivity research argues that the expansion of health care benefits represents a substantial investment opportunity for employers. Health and Work...
5) The following graph represents the market for electricity in a certain small town. De market...
5) The following graph represents the market for electricity in a certain small town. De market demand and MR = marginal revenue for the market. There is one supplier of electricity in this town, PG&E whose costs are represented in the graph. $12 ttttttttttt NUCU 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 IMR a) Based on the graph, do you think PG&E is a natural monopoly? Why or why not?...
10. Which of the following best represents the market for national soccer matches, recognizing that suppliers face a capacity constraint at a set quantity and that consumers do not have close substitutes for this particular good? Demand Quantity Demand Quantity Quantity 11. Which of the following market structures best represents the market for a life-saving pharmaceutical drug? The pharmaceutical industry is characterized by high upfront costs (e.g., research and development, obtaining FDA approval, etc...) and very low per-unit production costs....
Which of the following best describes the condition that leads to a natural monopoly? The firm takes anti-competitive actions to keep other firms out. Economies of scale are large relative to quantity demanded in a market. The government prohibits entry into an industry A single firm controls an industry because there are very few customers in the industry occurs when the price of a good changes and consumers have an incentive to consume less of the good with a higher...
5) The following graph represents the market for electricity in a certain small town. De market demand and MR = marginal revenue for the market. There is one supplier of electricity in this town, PG&E whose costs are represented in the graph. $12 ttttttttttt NUCU 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 IMR a) Based on the graph, do you think PG&E is a natural monopoly? Why or why not?...
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