Article Summary Since 2008, the United States Has Been Involved in Trade

question 413

Multiple Choice

Article Summary
Since 2008, the United States has been involved in trade negotiations over the Trans-Pacific Partnership (TPP) , a free trade agreement with 11 other countries on both sides of the Pacific Ocean. One area of the negotiations involves patents and intellectual property rights in the pharmaceutical industry. A number of developing countries have ignored international agreements concerning patents and intellectual property rights as a way to benefit their domestic pharmaceutical industries, to the detriment of those companies which have spent considerable time and money developing new medicines. For every 5,000 to 10,000 experimental drugs contemplated, only one will typically gain FDA approval, and this occurs only after up to 15 years of research at an average cost of more than $1 billion. Also, 30 percent of the U.S. workforce is either directly or indirectly employed in the pharmaceutical industry, so protection of these intellectual property rights is very important for the U.S. economy.
Source: Doug Schoen, "Intellectual Property Rights Matter," Forbes, September 24, 2013.
-Refer to the Article Summary. If more developing countries began abiding by international agreements which protect intellectual property rights, all of the following would most likely occur except

• A) pharmaceutical companies would increase investment in the development of more experimental drugs.
• B) pharmaceutical companies would consider expanding operations to these developing countries.
• C) more patents would be issued to pharmaceutical companies.
• D) fewer dollars would be spent on the development of new medicines.

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Definitions:

Producer Surplus

The differentiation between the selling price sellers are willing to accept and the price they eventually get.

Government Policy

Strategies and measures adopted by a government to guide its actions in the pursuit of specific goals and objectives.

Consumer Surplus

The difference between what consumers are willing to pay for a good and what they actually pay, representing the benefit consumers receive from purchasing the good at a lower price.

Price Floor

A government- or group-imposed price control that sets the lowest price at which a product can be sold.