Recall the Application about allegations that the makers of branded drugs made deals with generic drug makers once the patents expired on branded drugs to answer the following question(s).Recall the Application. When a patent ends and generic drugs are introduced, there is:
A. downward pressure on the price of the patent version of the drug.
B. upward pressure on the price of the patent version of the drug.
C. no pressure on the price of the patent version of the drug.
D. no demand for the patent version of the drug.
Answer: A
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Which of the following statements is (are) correct? Critics of the real business cycle model
a. question whether technology has ever been the cause of a recession. b. do not deny that some technology shocks affect many industries. However, they do not believe that there are enough of these shocks to explain recessions where output falls too as much as 10 percent below potential output. c. argue that aggregate supply changes drive most business cycles. d. All of the above e. None of the above
Given the assumptions of the classical model
A) the economy will often experience recessions and expansions. B) expansion will be the normal condition, but recessions will often be severe and require government intervention. C) the macroeconomy is erratic, and problems will often be increased over time. D) the market is a self-correcting mechanism.
The principle of voluntary exchange is based on the idea of:
A. making assumptions. B. isolating variables. C. thinking at the margin. D. rational self-interest.
Consider the market for ride-on lawn mowers and the recent increases in the price of oil. The recent increase in the price of oil makes it more expensive to manufacture ride-on lawn mowers. An increase in the price of oil also makes it more expensive to run a ride-on mower. What is likely to happen to equilibrium price and quantity of lawn mowers as a result in the changing price of oil? Supply and demand will both:
A. increase, increasing equilibrium quantity and having an indeterminate effect on price. B. decrease, decreasing equilibrium quantity and having an indeterminate effect on price. C. increase, increasing equilibrium price and having an indeterminate effect on quantity. D. decrease, increasing equilibrium price and having an indeterminate effect on quantity.