Why do pharmaceutical firms benefit most from patent protection?
A. Because research and development of drugs require large expenditures that need to be recouped while the patent is still valid.
B. Because pharmaceutical drugs need to be controlled by the government.
C. Because pharmaceutical companies pay large taxes to the government.
D. Because only physicians can legally prescribe pharmaceutical drugs.
Answer: A
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According to the intertemporal substitution effect, when the price level increases, the interest rate
A) rises and the quantity of real GDP demanded increases. B) rises and the quantity of real GDP demanded decreases. C) falls and the quantity of real GDP demanded decreases. D) is not affected.
Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. One of the reasons why Country A and Country B are not realistic representations of actual countries is:
A. the production possibilities curves are straight lines; realistic ones would be concave.
B. they only represent the production of two goods.
C. they only represent two countries.
D. All of these statements are true.
Deadweight losses occur in markets in which
a. firms decide to downsize. b. the government imposes a tax. c. profits fall because of low consumer demand. d. equilibrium prices fall.
If the unemployment rate increases from 4 percent to 10 percent, then the economy is mostly likely in a(n):
A. expansion. B. aggregation. C. recession. D. boom.