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a. In most of the developed countries, when a pharmaceutical firm develops a new drug, the patent laws give the firm a monopoly on the sale of the drug for a period of time (e.g. 10 to 15 years). Though a monopoly is generally inefficient, why does the government grant the firm a patent on its new drug?
b. When the patent runs out after about 20 years, what will happen to the price of the drug? Briefly explain your answer.
c. Most pharmaceutical firms are facing decreasing average costs and are always accused of creating deadweight loss because they charge prices higher than marginal cost. Is it feasible for governments to regulate these firms by asking them to charge prices equal to marginal cost (i.e. marginal-cost pricing)?
How many workers should the firm hire if the price of the output is $10? Suppose the price of the output falls to $7.50. Illustrate what do you think would be the short-run impact on the firmâ??s production.
Describe the Stolper-samuelson theory of trade. How does it differ from the factor endowment model? What are its predicted effects on wage-inequality in (a) industrialized countries that are captial abundant and (b) developing countries that are labo..
What lessons can we infer from history around the efforts to enact National Health Insurance and/or Health Reform? What are the economic rationales for different types of government intervention in health care?
Icahn Tackel just signed an $11.5 million, four year contract with an NFL team. He received a signing bonus of $2 million; $1.5 million at the end of year one; $3 million at the end of year two; $3.5 million at the end of year three; and 1.5 million ..
Determine the path followed by capital per worker and output per worker in the first 15 periods after z falls.
In the long run, some firms will respond by, The new equilibrium price and quanity suggest that the shape of the long-run supply curve in this industry is (horizontal, vertical, upward sloping, downward sloping)
The cost of capital is. To produce where marginal cost is equal to marginal revenue is called
Illustrate what is Michelle's opportunity cost of producing potatoes. What is Michelle's opportunity cost of producing chickens.
Based on heckscher online theorem. As a labor abundant country exports the labor intensive good X and imports the capital intensive good y from a capital abundant country.
Sketch a diagram that illustrates what happened to the Bridgewaters' budget constraint. What could they have been made worse off by the change.
An economy has $90 to divide between Katherina and Bianca. Katherina’s utility function is. Which allocations of $90 are exchange efficient? Calculate the allocation that maximizes utilitarian welfare. Calculate the allocation that maximizes Rawlsian..
Consider the following possible schemes for taxing a monopoly: A proportional tax on profits. Explain how each of these taxes would affect the monopolist's profit-maximizing output choice. Would the tax increase or decrease the deadweight loss from m..
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