The drug maker Wyeth produces the hormone-therapy drug Premarin, which is derived from the urine of pregnant mares. Not even Wyeth knows exactly what chemicals are in it, and the method of making the drug is a trade secret. Barr Laboratories has been trying to make a pill that is close enough to Premarin to be approved by the U.S. Food and Drug Administration as an "equivalent" drug. This story illustrates the importance of:
A) declining long-run cost curves as a way of preserving monopoly.
B) declining demand curves as an essential ingredient in keeping monopoly.
C) barriers to entry in keeping a monopoly position.
D) economies of scope in cementing a monopoly position.
Correct Answer:
Verified
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