Drug Companies Are Allowed to Be Monopolists in the Drugs

question 77

Multiple Choice

Drug companies are allowed to be monopolists in the drugs they discover in order to

• A)increase the availability of expensive but useful medications.
• B)increase the overall welfare of society through better health because drug companies continually produce better medications.
• C)encourage research.
• D)All of the above are correct.

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Definitions:

Security-market Line

A graphical representation that shows the expected rate of return of an investment as a function of its beta, or systematic risk, relative to the market as a whole.

Capital-market Line

A line in the capital market theory that depicts the risk-return trade-off for efficient portfolios, showing that higher risk leads to higher expected return.

Market Expected Rate

The rate of return that investors anticipate from an investment, taking into account all known risks and future expectations.

Capital Allocation

The process of distributing financial resources among various projects or investments to achieve strategic goals and maximize returns.