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 downward pressure on price. Therefore, the makers of the brand name drug will:
A. raise their price.
B. abandon the product.
C. claim the generic is not as good as the patent version of the drug.
D. price discriminate.
Answer: C
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Between September 2009 and September 2010, the recovery of private inventories, as shown in Figure 19.1, was far stronger than the overall economy's recovery from the Great Recession. Which is the most reasonable inference?
A) Persistently weak aggregate demand gave producers no alternative but to place current output into storage. B) Businesses overestimated the strength of the recovery, which lead to overstocking of inventories. C) Financial constraints had forced businesses to contract inventories by more than they otherwise would have chosen. The period beginning in September 2009 reflects the attempt by businesses to correct this. D) Generally poor weather conditions in the final months of the year in the northern hemisphere make it less costly to store goods than to transport them to consumers.
Relative to the short-run demand for gasoline, the long-run demand for gasoline is
A) probably more elastic since people need time to change automobiles and driving habits. B) probably less elastic since people need time to change automobiles and driving habits. C) probably more elastic because people can hoard this good. D) probably less elastic because people cannot store this good.
Distinguish between invention and innovation
Exhibit 16-6 Money, investment and product markets
In Exhibit 16-6, an increase in the money supply from MS1 to MS2 causes:
A. interest rates to fall from i1 to i2 and the quantity demanded of investment to decrease from I2 to I1. B. interest rates to fall from i1 to i2 and aggregate demand to shift from AD2 to AD1. C. interest rates to fall from i1 to i2 and the quantity demanded of investment to increase from I1 to I2. D. interest rates to rise from i2 to i1 and the quantity demanded of investment to remain the same.