Some people propose reducing the number of years that a drug patent lasts, but their critics argue that such 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 OA. would not charge higher prices because demand would be unchanged. OB. would charge higher prices because marginal costs would have increased. OC. would not charge higher prices because average costs would decrease. OD. would not charge higher prices because demand would become flatter. OE. would charge higher prices because demand becomes less elastic.
Some people propose reducing the number of years that a drug patent lasts, but their critics argue that such 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 OA. would not charge higher prices because demand would be unchanged. OB. would charge higher prices because marginal costs would have increased. OC. would not charge higher prices because average costs would decrease. OD. would not charge higher prices because demand would become flatter. OE. would charge higher prices because demand becomes less elastic.
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.6P
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