Question

4. How does a generic drug differ from its brand-name, previouslypatented equivalent? Explain why the price of a brand-name drugtypically declines when an equivalent generic drug becomesavailable? Explain how that drop in price affects allocativeefficiency.

5. How does the demand curve faced by a purely monopolistic sellerdiffer from that confronting a purely competitive firm? Why does itdiffer? Of what significance is the difference? Why is the puremonopolist's demand curve not perfectly inelastic?

6. U.S. pharmaceutical companies charge different prices forprescription drugs to buyers in different nations, depending onelasticity of demand and government-imposed price ceilings. Explainwhy these companies, for profit reasons, oppose laws allowingre-importation of drugs to the United States.