The Cost of Researching and Developing a New Drug Are

question 17

Essay

The cost of researching and developing a new drug are fixed with respect to the number of units produced. Luna Pharmaceutical would like to sell drugs to poor countries "at cost." Suppose that Luna is subject to the fixed cost fallacy. Explain why it would over-price the drugs.

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Definitions:

Immunity

The body's ability to resist or eliminate potentially harmful foreign materials or abnormal cells, including pathogens and cancer cells.

Disease

A disorder of structure or function in a human, animal, or plant, especially one that produces specific signs or symptoms or that affects a specific location and is not simply a direct result of physical injury.

Healthcare-associated Infection

Infections patients can get while receiving medical treatment in a healthcare facility, often preventable and posing significant risks to patient safety.

Staph Bacteria

A group of bacteria, belonging to the genus Staphylococcus, that can cause a variety of diseases through infection.