Fred is a scientist who has developed a new and unique medicinal drug. He has be

Question

Fred is a scientist who has developed a new and unique medicinal drug. He has been able to secure a patent (legal copyright) for his new rug. Competitors are legally blocked from manufacturing and selling this new drug Fred has developed while his patent is in place Which of the following statements is true? Fred's competitors can legally manufacture and sell this new drug Fred developed while his patent is in place. The market for Fred's new drug will be perfectly competitive. The patent is an immediate threat for Fred's new drug that will destroy his monopoly power. Fred will be able to exert monopoly power when pricing his new drug.

Explanation / Answer

Ans. This is an interesting question , Let's start answering it :

Last statement is Correct ie Fred will be able to exert monopoly power when Pricing his New Drug.

Because Patent gives an exclusive right to Fred that no one except him can use his invention without his proper permission. This gives Fred a right to exert a Monopoly power on Price because he would only be the one who would be Supplying that Drug. But , if he gives Permission to his Competitors to use that drug , then His Competitors can also legally manufacture that drug while his patent is still in place , but only when Fred Gives Them Permission. Thus statement 1 can also be Right only under this condition.

I hope you understood the answer. Do ask in case of Doubts.

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Best of Luck !! Keep Chegging !!

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