Suppose a New Vaccine for Lyme Disease Is Developed by Merck

question 79

Multiple Choice

Suppose a new vaccine for Lyme disease is developed by Merck, a large drug company. Which of the following is most likely to occur?

• A) Merck will apply for a patent on the vaccine that grants it the monopoly rights to the vaccine for many years.
• B) Merck will not tell anyone about its discovery though it will sell the vaccine.
• C) Other firms will quickly copy the formula making the market for the vaccine competitive.
• D) Merck will have a monopoly on this vaccine because of economies of scale.

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Definitions:

Homogeneous Products

Goods that are essentially identical, offered by different sellers within a market.

First-mover Advantage

The competitive advantage gained by the initial ("first-moving") significant occupant of a market segment.

Bertrand Duopoly

A market structure in which two companies compete on price, each setting their price independently with the aim of maximizing profit, assuming the competitor's price is fixed.

Homogenous Products

Goods that are identical in features and quality, making them indistinguishable to consumers from those offered by competing suppliers.