During the 2001 anthrax scare, the U.S. government threatened to disregard Bayer

Question

During the 2001 anthrax scare, the U.S. government threatened to disregard Bayer%u2019s patent of ciprofloxacin, the most effective drug to fight anthrax, and license the production of the drug to American drug companies to stockpile the drug in case of an anthrax epidemic. While the policy would lower costs to the U.S. government of stockpiling the drug, it also would have other costs. What are those costs?

Instructions: Select all that apply.    Lost profit by Bayer.    Fewer new drugs invented.    Higher current welfare loss.    Increased sunk costs by drug industry.


What three things must a firm be able to do to price discriminate?

Instructions: Select all that apply.    Identify groups with different elasticities.    Separate groups with different elasticities.    Limit the ability to resell the good among groups.    Accept the market price as given.    Limit sales to the group with the lowest elasticity.






During the 2001 anthrax scare, the U.S. government threatened to disregard Bayer%u2019s patent of ciprofloxacin, the most effective drug to fight anthrax, and license the production of the drug to American drug companies to stockpile the drug in case of an anthrax epidemic. While the policy would lower costs to the U.S. government of stockpiling the drug, it also would have other costs. What are those costs?

Instructions: Select all that apply.    Lost profit by Bayer.    Fewer new drugs invented.    Higher current welfare loss.    Increased sunk costs by drug industry.


What three things must a firm be able to do to price discriminate?

Instructions: Select all that apply.    Identify groups with different elasticities.    Separate groups with different elasticities.    Limit the ability to resell the good among groups.    Accept the market price as given.    Limit sales to the group with the lowest elasticity.





   Lost profit by Bayer.    Fewer new drugs invented.    Higher current welfare loss.    Increased sunk costs by drug industry.


What three things must a firm be able to do to price discriminate?

Instructions: Select all that apply.    Identify groups with different elasticities.    Separate groups with different elasticities.    Limit the ability to resell the good among groups.    Accept the market price as given.    Limit sales to the group with the lowest elasticity.



   Identify groups with different elasticities.    Separate groups with different elasticities.    Limit the ability to resell the good among groups.    Accept the market price as given.    Limit sales to the group with the lowest elasticity.



   Lost profit by Bayer.    Fewer new drugs invented.    Higher current welfare loss.    Increased sunk costs by drug industry.

Explanation / Answer

a) Lost Profit by bayer.

Higher current welfare loss

Increased sunk costs by drug industry.

b) Identify groups with different elasticities.

Separate groups with different elasticities.

Limit sales to the group with the lowest elasticity.

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