Do the question below. Some prescription drugs sell for more in the United State

Question

Do the question below.

Some prescription drugs sell for more in the United States than they do in other countries. Which of the following statements about this issue is most likely to be true? Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare. Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries. Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States. Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs.

Explanation / Answer

D) DRUG COMPANIES ARE ENGAGING IN PRICE DISCRIMINATION, BUT THIS MIGHT IMPROVE GLOBAL SOCIAL WELFARE IF IT GIVES MORE PEOPLE ACCESS TO THE DRUGS.

THE DRUG COMPANIES HAVE LITTLE INCENTIVE IN DEVELOPING DRUGS FOR THE POOR COUNTRIES, HOWEVER THE RICH COUNTRIES ARE MORE LUCRATIVE.

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