Question 1

Drug companies tend to attribute higher drug prices on

Accepted Answer

A) pharmacies charging too much for drugs. 
B) high litigation costs on drugs that are ultimately shown to be dangerous. 
C) doctors distributing too many free samples. 
D) Pharmacies charging too much for drugs and high litigation costs on drugs that are ultimately shown to be dangerous. 
A) pharmacies charging too much for drugs. 
B) high litigation costs on drugs that are ultimately shown to be dangerous. 
C) doctors distributing too many free samples. 
D) Pharmacies charging too much for drugs and high litigation costs on drugs that are ultimately shown to be dangerous.

Question 2

FDA approval is ______ if the increase in costs to patients (including the increase in deaths)is greater than the increase in benefits due to more rapid approval

Accepted Answer

A) too lax 
B) too stringent 
C) just right 
A) too lax 
B) too stringent 
C) just right

Question 3

Drug companies tend to attribute higher drug prices on

Accepted Answer

A) pharmacies charging too much for drugs. 
B) long testing processes. 
C) doctors distributing too many free samples. 
D) pharmacies charging too much for drugs and long testing processes. 
A) pharmacies charging too much for drugs. 
B) long testing processes. 
C) doctors distributing too many free samples. 
D) pharmacies charging too much for drugs and long testing processes.

Question 4

A prescription drug price policy that generates deadweight loss implies that the

Accepted Answer

A) loss to consumers is greater than the loss to firms. 
B) loss of firms is greater than the loss to consumers. 
C) loss to consumers is greater than the gain to firms. 
D) gain to consumers is less than the loss to firms. 
A) loss to consumers is greater than the loss to firms. 
B) loss of firms is greater than the loss to consumers. 
C) loss to consumers is greater than the gain to firms. 
D) gain to consumers is less than the loss to firms.

Question 5

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

Accepted Answer

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

Question 6

-In Figure 26.1, consumer surplus under monopoly is

Accepted Answer

A) FAC 
B) FABE 
C) EBC 
D) P1AB 
A) FAC 
B) FABE 
C) EBC 
D) P1AB

Question 7

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

Question 8

In 2014 prescription drugs account for approximately ____ of total health care spending.

Accepted Answer

A) 2.5% 
B) 10% 
C) 25% 
D) 50% 
A) 2.5% 
B) 10% 
C) 25% 
D) 50%

Question 9

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 without AIDS there is a freely available substitute-monogamy with an unaffected partner. 
D) for a person without AIDS there are no substitutes. 
A) the vaccine would be more expensive. 
B) the cure would be more expensive. 
C) for a person without AIDS there is a freely available substitute-monogamy with an unaffected partner. 
D) for a person without AIDS there are no substitutes.

Question 10

Most prescriptions are written for

Accepted Answer

A) live-saving drugs. 
B) live-extending drugs. 
C) drugs which simply make life more comfortable or enjoyable. 
D) over-the-counter drugs. 
A) live-saving drugs. 
B) live-extending drugs. 
C) drugs which simply make life more comfortable or enjoyable. 
D) over-the-counter drugs.

Question 11

When a drug ceases to require a prescription it is said to have gone

Accepted Answer

A) off-the-rack. 
B) off-the-wagon. 
C) off-label. 
D) over-the-counter. 
A) off-the-rack. 
B) off-the-wagon. 
C) off-label. 
D) over-the-counter.

Question 12

-In Figure 26.1, the price under monopoly is

Accepted Answer

A) A 
B) P1 
C) P2 
D) F 
A) A 
B) P1 
C) P2 
D) F

Question 13

Economists estimate that the rate of return to prescription drug companies is

Accepted Answer

A) much above the average. 
B) at or slightly above the average. 
C) slightly below average. 
D) much below average. 
A) much above the average. 
B) at or slightly above the average. 
C) slightly below average. 
D) much below average.

Question 14

FDA approval is ______ if the increase in costs to patients (including the increase in deaths)is less than the increase in benefits due to more rapid approval

Accepted Answer

A) too lax 
B) too stringent 
C) just right 
A) too lax 
B) too stringent 
C) just right

Question 15

A patent

Accepted Answer

A) is better for a writer of books than it is for an inventor of medicines. 
B) a right granted to an inventor by the government to be the exclusive seller of a good. 
C) is never granted 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) a right granted to an inventor by the government to be the exclusive seller of a good. 
C) is never granted for inventions anymore. 
D) makes inventing the good less appealing.

Question 16

-In Figure 26.1, consumer surplus under perfect competition is

Accepted Answer

A) FAC 
B) FABE 
C) EBC 
D) P2AC 
A) FAC 
B) FABE 
C) EBC 
D) P2AC

Question 17

Existence of a "deadweight loss" in the prescription drug market indicates that

Accepted Answer

A) the number of new drugs invented is less than the optimal number. 
B) the increased profits to firms is greater than the decreased net value to consumers. 
C) the increased profits to firms is less than the decreased net value to consumers. 
D) the number of new drugs invented is less than the optimal number and the increased profits to firms is less than the decreased net value to consumers. 
A) the number of new drugs invented is less than the optimal number. 
B) the increased profits to firms is greater than the decreased net value to consumers. 
C) the increased profits to firms is less than the decreased net value to consumers. 
D) the number of new drugs invented is less than the optimal number and the increased profits to firms is less than the decreased net value to consumers.

Question 18

Between 1986 and 2015, while the general price level increased by 116%, drug prices

Accepted Answer

A) rose by 55% 
B) rose by 136% 
C) rose by 268% 
D) rose by 552% 
A) rose by 55% 
B) rose by 136% 
C) rose by 268% 
D) rose by 552%

Question 19

-In Figure 26.1, producer surplus under perfect competition is

Accepted Answer

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

Question 20

U.S. drug laws prohibiting re-importation of prescription drugs prevent

Accepted Answer

A) American pharmaceutical distributors from re-selling to Canadian citizens at higher prices. 
B) the Canadian government from dictating the drug prices to be paid by U.S. citizens. 
C) U)S. pharmaceutical companies from earning monopoly profits. 
D) Canadian pharmaceutical distributors from re-selling to American citizens at lower prices. 
A) American pharmaceutical distributors from re-selling to Canadian citizens at higher prices. 
B) the Canadian government from dictating the drug prices to be paid by U.S. citizens. 
C) U)S. pharmaceutical companies from earning monopoly profits. 
D) Canadian pharmaceutical distributors from re-selling to American citizens at lower prices.

Exam 26: The Economics of Prescription Drugs

Drug companies tend to attribute higher drug prices on

FDA approval is ______ if the increase in costs to patients (including the increase in deaths)is greater than the increase in benefits due to more rapid approval

Drug companies tend to attribute higher drug prices on

A prescription drug price policy that generates deadweight loss implies that the

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

-In Figure 26.1, consumer surplus under monopoly is

Drug companies tend to attribute higher drug prices on

In 2014 prescription drugs account for approximately ____ of total health care spending.

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

Most prescriptions are written for

When a drug ceases to require a prescription it is said to have gone

-In Figure 26.1, the price under monopoly is

Economists estimate that the rate of return to prescription drug companies is

FDA approval is ______ if the increase in costs to patients (including the increase in deaths)is less than the increase in benefits due to more rapid approval

A patent

-In Figure 26.1, consumer surplus under perfect competition is

Existence of a "deadweight loss" in the prescription drug market indicates that

Between 1986 and 2015, while the general price level increased by 116%, drug prices

-In Figure 26.1, producer surplus under perfect competition is

U.S. drug laws prohibiting re-importation of prescription drugs prevent

Economics: the Study of Opportunity Cost

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So You Want to Be a Lawyer: Economics and the Law

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