What happens to the price and quantity sold of a drug when its patent runs out? (i) The price will fall.
(ii) The quantity sold will fall.
(iii) The marginal cost of producing the drug will rise.
A)(i) only
B)(i) and (ii)
C)(ii) and (iii)
D)(i), (ii), and (iii)

Question

What happens to the price and quantity sold of a drug when its patent runs out? (i)	The price will fall.
(ii)	The quantity sold will fall.
(iii)	The marginal cost of producing the drug will rise.
A)(i) only
B)(i) and (ii)
C)(ii) and (iii)
D)(i), (ii), and (iii)

Quizplus · Accepted Answer

When a drug's patent expires, generic manufacturers can produce and sell the drug, increasing competition and typically leading to a decrease in price. The quantity sold usually increases due to the lower price, not decreases, and the marginal cost of production does not necessarily rise.

What Happens to the Price and Quantity Sold of a Drug