Homework Help: Economics/social studies

Posted by Camilla on Tuesday, March 17, 2009 at 6:35pm.

This isn't an example of an invisible hand is it?

A single drug company obtains a patent on a lifesaving drug. The company can charge whatever it chooses for the drug and will not lose customers. Is the invisible hand at work in this scenario?

I say no because the customers what a better value of the drug than charging too much for the drug.

Economics/social studies - Ms. Sue, Tuesday, March 17, 2009 at 6:44pm
I agree with your answer.
Economics/social studies - Camilla, Tuesday, March 17, 2009 at 6:45pm
Thank You!! Happy St. Patricks Day
Economics/social studies - Ms. Sue, Tuesday, March 17, 2009 at 6:48pm
You're welcome!

Erin Go Bragh!! :-)
Economics/social studies - economyst, Wednesday, March 18, 2009 at 9:38am
I disagree. The "invisible hand" has nothing to do with moral precepts.

The firm is a profit maximizer. It provides a product and changes the maximum amount it thinks it can. People willing to pay the price do so. So the product goes to those people willing and able to pay the highest price. Perhaps immoral, but exactly what the "invisible hand" concept predicts. (Goods go to those folks willing to pay the most).

Now then, one could argue, the firm is acting as a monopolist and this is a form of market failure where there are some people willing to pay more for a product than it costs to produce. A fair point, I would counter with the invisible hand is working, but not perfectly.

Answer this Question

Related Questions

accounting - hey there, i was wondering if anyone could help me with the ...
economics in healthcare - 6. Calculate Herfindahl Index and Concentration Ratios...
accounting - Brianna Moore is an accountant for New World Pharmaceuticals. Her ...
college biology-drug metabolism - You are interested in examining the metabolism...
Biology - What ethical issues might arise when a drug company funds trials of a ...
Economics/Social Studies - Please help me with this it's about the invisible...
economics - Why might it be appropriate for the government to allow a ...
city college - (Drug Benefits and Post Retirement Liabilities) Delphi Company ...
econ 460 - 1. The demand for a new drug is given by P = 4 – 0.5Q. The ...
Economics Today the micro view 13th edition - A British pharmaceutical company ...

For Further Reading

First Name:
School Subject:
Answer: