Question 1

A patent is

Accepted Answer

A) a right granted to an inventor by the government to be the exclusive seller of a good. 
B) often necessary to motivate inventions. 
C) never granted for inventions anymore. 
D) a right granted to an inventor by the government to be the exclusive seller of a good and is often necessary to motivate inventions. 
A) a right granted to an inventor by the government to be the exclusive seller of a good. 
B) often necessary to motivate inventions. 
C) never granted for inventions anymore. 
D) a right granted to an inventor by the government to be the exclusive seller of a good and is often necessary to motivate inventions. D

Question 2

Drug companies tend to attribute higher drug prices on

Accepted Answer

A) the low percentage of attempts that actually result in revenue producing drugs alone. 
B) high litigation costs on drugs that are ultimately shown to be dangerous alone. 
C) doctors distributing too many free samples. 
D) the low percentage of attempts that actually result in revenue producing drugs and high litigation costs on drugs that are ultimately shown to be dangerous. 
A) the low percentage of attempts that actually result in revenue producing drugs alone. 
B) high litigation costs on drugs that are ultimately shown to be dangerous alone. 
C) doctors distributing too many free samples. 
D) the low percentage of attempts that actually result in revenue producing drugs and high litigation costs on drugs that are ultimately shown to be dangerous. D

Question 3

Patents grant the inventor the exclusive rights to sell goods made with the invention

Accepted Answer

A) for a limited duration. 
B) as long as the inventor is alive. 
C) forever. 
D) as long as the inventor charges what are viewed as reasonable prices. 
A) for a limited duration. 
B) as long as the inventor is alive. 
C) forever. 
D) as long as the inventor charges what are viewed as reasonable prices. A

Question 4

The "price" of effectively treating AIDS

Accepted Answer

A) has gone up substantially with the invention of new drugs that cost more than the older ones. 
B) has gone down substantially with the invention of new drugs that cost less than the older ones. 
C) is very difficult to estimate, because prior to the new drugs there was no effective treatment. 
D) has stayed the same. 
A) has gone up substantially with the invention of new drugs that cost more than the older ones. 
B) has gone down substantially with the invention of new drugs that cost less than the older ones. 
C) is very difficult to estimate, because prior to the new drugs there was no effective treatment. 
D) has stayed the same.

Question 5

A patent

Accepted Answer

A) is better for a writer of books than it is for an inventor of medicines. 
B) makes a good that has recently been invented more expensive than it would otherwise be. 
C) is never sought for inventions anymore. 
D) makes inventing the good less appealing. 
A) is better for a writer of books than it is for an inventor of medicines. 
B) makes a good that has recently been invented more expensive than it would otherwise be. 
C) is never sought for inventions anymore. 
D) makes inventing the good less appealing.

Question 6

Patents on prescription drugs last

Accepted Answer

A) forever. 
B) from the moment they have been received by the patent office until they are approved by the FDA. 
C) from the moment they have been received by the patent office until they hit the market. 
D) from the moment they have been received by the patent office and for several more. years. 
A) forever. 
B) from the moment they have been received by the patent office until they are approved by the FDA. 
C) from the moment they have been received by the patent office until they hit the market. 
D) from the moment they have been received by the patent office and for several more. years.

Question 7

Which of the following legal creations is imperative to creating profits for prescription drug companies?

Accepted Answer

A) Trademarks 
B) Copyrights 
C) Patents 
D) Corporations 
A) Trademarks 
B) Copyrights 
C) Patents 
D) Corporations

Question 8

That U.S. drug companies can sell their drugs in Canada and Mexico for much less than they sell them for in the U.S. suggests that the

Accepted Answer

A) drugs sell for less than their marginal cost in Canada and Mexico. 
B) marginal cost of producing the drugs is between the U.S. price and the Canadian price (so on average the company is making a profit). 
C) marginal cost of producing the drugs is less than the Canadian and Mexican price. 
D) marginal cost of producing the drugs is higher than even the U.S. price. 
A) drugs sell for less than their marginal cost in Canada and Mexico. 
B) marginal cost of producing the drugs is between the U.S. price and the Canadian price (so on average the company is making a profit). 
C) marginal cost of producing the drugs is less than the Canadian and Mexican price. 
D) marginal cost of producing the drugs is higher than even the U.S. price.

Question 9

Drug companies tend to attribute higher drug prices on

Accepted Answer

A) the low percentage of attempts that actually result in revenue producing drugs. 
B) high litigation costs on drugs that are ultimately shown to be dangerous. 
C) doctors distributing too many free samples. 
D) the low percentage of attempts that actually result in revenue producing drugs and high litigation costs on drugs that are ultimately shown to be dangerous. 
A) the low percentage of attempts that actually result in revenue producing drugs. 
B) high litigation costs on drugs that are ultimately shown to be dangerous. 
C) doctors distributing too many free samples. 
D) the low percentage of attempts that actually result in revenue producing drugs and high litigation costs on drugs that are ultimately shown to be dangerous.

Question 10

Economists generally agree that price controls in the U.S. would

Accepted Answer

A) increase prices to consumers. 
B) increase the motivation to invent new drugs. 
C) diminish profits to drug companies. 
D) increase the motivation to invent new drugs and diminish profits to drug companies. 
A) increase prices to consumers. 
B) increase the motivation to invent new drugs. 
C) diminish profits to drug companies. 
D) increase the motivation to invent new drugs and diminish profits to drug companies.

Question 11

The reason why a cure to a disease such as AIDS would have less elastic demand than a vaccine at every price is that

Accepted Answer

A) the vaccine would be more expensive. 
B) the cure would be more expensive. 
C) for a person with AIDS the only alternative to the cure is death. 
D) for a person with AIDS a vaccine would be more effective. 
A) the vaccine would be more expensive. 
B) the cure would be more expensive. 
C) for a person with AIDS the only alternative to the cure is death. 
D) for a person with AIDS a vaccine would be more effective.

Question 12

Drug companies tend to attribute higher drug prices on

Accepted Answer

A) the low percentage of attempts that actually result in revenue producing drugs. 
B) high invention costs. 
C) doctors distributing too many free samples. 
D) the low percentage of attempts that actually result in revenue producing drugs and high invention costs. 
A) the low percentage of attempts that actually result in revenue producing drugs. 
B) high invention costs. 
C) doctors distributing too many free samples. 
D) the low percentage of attempts that actually result in revenue producing drugs and high invention costs.

Question 13

Drug companies tend to attribute higher drug prices on

Accepted Answer

A) high invention costs. 
B) long testing processes. 
C) doctors distributing too many free samples. 
D) high invention costs and long testing processes. 
A) high invention costs. 
B) long testing processes. 
C) doctors distributing too many free samples. 
D) high invention costs and long testing processes.

Question 14

If the U.S. government were to note that because drug companies can sell their drugs in Canada and make a profit at those regulated prices and impose a similar set of regulations in the U.S. this would have the effect of

Accepted Answer

A) raising the price of drugs in the U.S. 
B) decreasing the motivation for U.S. drug companies to innovate in the future. 
C) increasing the motivation for Canadian drug companies to innovate in the future. 
D) eliminating all profit for drug companies. 
A) raising the price of drugs in the U.S. 
B) decreasing the motivation for U.S. drug companies to innovate in the future. 
C) increasing the motivation for Canadian drug companies to innovate in the future. 
D) eliminating all profit for drug companies.

Question 15

Economists generally agree that price controls in the U.S. would

Accepted Answer

A) increase prices to consumers. 
B) diminish the motivation to invent new drugs. 
C) diminish profits to drug companies. 
D) diminish the motivation to invent new drugs and diminish profits to drug companies. 
A) increase prices to consumers. 
B) diminish the motivation to invent new drugs. 
C) diminish profits to drug companies. 
D) diminish the motivation to invent new drugs and diminish profits to drug companies.

Question 16

A patent

Accepted Answer

A) is better for a writer of books than it is for an inventor of medicines. 
B) is often necessary to motivate inventions. 
C) makes a good that has recently been invented more expensive than it could be. 
D) is often necessary to motivate inventions and makes a good that has recently been invented more expensive than it could be. 
A) is better for a writer of books than it is for an inventor of medicines. 
B) is often necessary to motivate inventions. 
C) makes a good that has recently been invented more expensive than it could be. 
D) is often necessary to motivate inventions and makes a good that has recently been invented more expensive than it could be.

Question 17

After a drug has been invented, monopoly (when compared to perfect competition)creates

Accepted Answer

A) deadweight loss. 
B) lower profits to firms. 
C) higher prices to consumers. 
D) deadweight loss and higher prices to consumers. 
A) deadweight loss. 
B) lower profits to firms. 
C) higher prices to consumers. 
D) deadweight loss and higher prices to consumers.

Question 18

An orphan drug is designed to treat

Accepted Answer

A) an illness that afflicts few people. 
B) people without parents. 
C) an illness affecting large numbers of people. 
D) an illness that causes parents to die. 
A) an illness that afflicts few people. 
B) people without parents. 
C) an illness affecting large numbers of people. 
D) an illness that causes parents to die.

Question 19

A patent

Accepted Answer

A) is a right granted to an inventor by the government to be the exclusive seller of a good. 
B) makes inventing the good less appealing. 
C) makes a good that has recently been invented more expensive than it would otherwise be. 
D) is both a right granted to an inventor by the government to be the exclusive seller of a good and makes a good that has recently been invented more expensive than it would otherwise be. 
A) is a right granted to an inventor by the government to be the exclusive seller of a good. 
B) makes inventing the good less appealing. 
C) makes a good that has recently been invented more expensive than it would otherwise be. 
D) is both a right granted to an inventor by the government to be the exclusive seller of a good and makes a good that has recently been invented more expensive than it would otherwise be.

Question 20

-In Figure 26.1, producer surplus under monopoly is

Accepted Answer

A) FP2C 
B) FP1BE 
C) EBC 
D) P2AC 
A) FP2C 
B) FP1BE 
C) EBC 
D) P2AC

Exam 26: The Economics of Prescription Drugs

A patent is

Drug companies tend to attribute higher drug prices on

Patents grant the inventor the exclusive rights to sell goods made with the invention

The "price" of effectively treating AIDS

A patent

Patents on prescription drugs last

Which of the following legal creations is imperative to creating profits for prescription drug companies?

That U.S. drug companies can sell their drugs in Canada and Mexico for much less than they sell them for in the U.S. suggests that the

Drug companies tend to attribute higher drug prices on

Economists generally agree that price controls in the U.S. would

The reason why a cure to a disease such as AIDS would have less elastic demand than a vaccine at every price is that

Drug companies tend to attribute higher drug prices on

Drug companies tend to attribute higher drug prices on

If the U.S. government were to note that because drug companies can sell their drugs in Canada and make a profit at those regulated prices and impose a similar set of regulations in the U.S. this would have the effect of

Economists generally agree that price controls in the U.S. would

A patent

After a drug has been invented, monopoly (when compared to perfect competition)creates

An orphan drug is designed to treat

A patent

-In Figure 26.1, producer surplus under monopoly is

Economics: the Study of Opportunity Cost

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The Concept of Elasticity and Consumer and Producer Surplus

Firm Production, Cost, and Revenue

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Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

Interest Rates and Present Value

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Policy

Federal Spending

Federal Deficits, Surpluses, and the National Debt

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Is Economic Stagnation the New Normal

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International Finance and Exchange Rates

The European Debt Crisis

Economic Growth and Development

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The Line Between Legal and Illegal Goods

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

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The Economics of Crime

Antitrust

The Economics of Race and Discrimination

Income and Wealth Inequality

Farm Policy

Minimum Wage

Ticket Brokers and Ticket Scalping

Rent Control

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Poverty and Welfare

Head Start

Social Security

Personal Income Taxes

Energy Prices

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The Stock Market Crashes

Unions

Walmart: Always Low Prices and Low Wages- Always

The Economic Impact of Casino Gambling

The Economics of Terrorism

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