Economics/social studies

posted by Camilla

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.

  1. Ms. Sue

    I agree with your answer.

  2. Camilla

    Thank You!! Happy St. Patricks Day

  3. Ms. Sue

    You're welcome!

    Erin Go Bragh!! :-)

  4. economyst

    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.

Respond to this Question

First Name

Your Answer

Similar Questions

  1. accounting

    hey there, i was wondering if anyone could help me with the following questions. I would really appreciate your help . Multiple choice: A company obtained a patent for a drug it developed. The amount capitalized in asocciation with …
  2. college biology-drug metabolism

    You are interested in examining the metabolism of a new drug that has been developed in your company. Briefly describe how you would determine whether cytochrome P450 is involved in metabolizing the drug, and if so, which subtype is …
  3. economics in healthcare

    6. Calculate Herfindahl Index and Concentration Ratios for these markets. Drug Companies H.I. = ?
  4. econ 460

    1. The demand for a new drug is given by P = 4 – 0.5Q. The marginal cost of manufacturing the drug is constant and equal to $1 per unit. (Prices and costs are in terms of dollars, and quantities are in millions). a. Illustrate on …
  5. statistics

    drug company promises to help people lose at least 3 pounds per week. 15 people use the drug. they lose an average of 2.8 lbs per week with a standard deviation of .5lbs. is this a left tail or right tail and why?
  6. P.E.

    _______________ occurs when a person internationally uses drug improperly. A side affect Drug misuse*** Drug synergism Drug abuse Thanks!!
  7. P.E. ASAP PLZ

    A person who has a really bad cough decides to take twice the recommended amount of cough syrup. This is an example of Drug misuse*** Drug abuse A drug overdose Proper drug use
  8. Math (Finite)

    A test for a certain drug produces a false negative 5% of the time and a false positive 8% of the time. Suppose 12% of the employees at a certain company use the drug. If an employee at the company tests positive, what is the probability …
  9. Health

    Nausea, vomiting, or headache after taking a drug may be due to A . Dependency B . Addiction C . Side effects D . Tolerance •• ________ occurs when a person intentionally uses a drug improperly. A. A side effect •• B. Drug …
  10. PE/Health

    Reading and following the directions on a drug label can help you avoid select all that apply A. Getting arrested•• B. Drug synergism C. Drug antagonism •• D. Drug interaction •• GHB and Rohypnol are example of select all …

More Similar Questions