One reason patent protection is vitally important to pharmaceutical firms is
A) successful new drugs are not profitable. If firms are not granted patents many would go out of business and health care would be severely diminished.
B) the approval process for new drugs through the Food and Drug Administration can take more than 10 years and is very costly. Patents enable firms to recover costs incurred during this process.
C) the high salaries pharmaceutical firms pay to scientists and doctors make their labor costs higher than for any other business. Profits from patents are needed to pay these labor costs.
D) that taxes on profits from drugs are very high; profits from patent protection enable firms to pay these taxes.
B
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Well-functioning financial markets
A) cause inflation. B) eliminate the need for indirect finance. C) cause financial crises. D) allow the economy to operate more efficiently.
Table 14.2Monetary Aggregates of the U.S. Financial SystemItemAmountCash held by public$100 billionTransactions deposits$300 billionRequired reserves$30 billionExcess reserves$0 billionU.S. bonds held by public$475 billionAssume an original balance sheet: The level of total reserves in Table 14.2 is
A. $315 billion. B. $475 billion. C. $30 billion. D. $330 billion.