Which of the Following Reasons Justifies the Increase in the Expenditure

question 87

Multiple Choice

Which of the following reasons justifies the increase in the expenditure on prescription drugs in the U.S.?

• A)Lack of sufficient investment in research and development of new drugs
• B)Proper functioning of the Medicare and Medicaid programs
• C)Insufficient supply of prescription drugs leading to a shortage
• D)Increasing returns to scale experienced by the drug manufacturers
• E)Decrease in the time required to introduce a new drug into the market

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Definitions:

Stockholders' Equity

The portion of the balance sheet that represents the capital received from investors in exchange for stock (paid-in capital), donated capital and retained earnings.

Cash Dividend

A payment made by a company out of its earnings to shareholders, usually in the form of cash.

Liquidating Dividend

A type of dividend paid by a company to its shareholders out of its capital base, essentially returning a portion of the capital initially invested back to the shareholders.

Earnings Per Share

A metric for assessing a company's earnings, determined by dividing its net income by the total outstanding common stock shares.