Why does the government grant patents to companies that research new drugs?
What will be an ideal response?
Researching new drugs is a very risky and expensive business. If the government did not grant the firm a patent then all other firms would be able copy its innovation as soon as the FDA approved the drug. This competition would make the price of the drug so low that the research firm would not be able to recoup its investment. The result would be that no new drugs would be developed. By allowing firms with new drugs to hold patents the government encourages private research and development.
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A corporation ________ taxes on its profits and its stockholders ________ taxes on any dividends made to them by the company
A) pays; pay B) pays; do not pay C) does not pay; pay D) does not pay; do not pay
The table in the above figure shows the levels of output resulting from different levels of inputs. Which of the following conclusions can be drawn from this information?
A) Increasing returns to scale exist between 100 and 200 units of output. B) Constant returns to scale exist throughout all levels of production. C) Labor is subject to diminishing marginal productivity in the short run. D) No firm conclusions can be drawn.
The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time
a. increase exports b. reduce the competitive pressure on prices c. lower the value of the currency in the country with the higher inflation rate d. increase foreign aid e. increase the speculative demand for the currency
Suppose a monopolist sells 10,000 units of output at $22 per unit. The firm's total revenue is
A. $2,200. B. $22,000. C. $220,000. D. $2,200,000.