If the price of the AIDS drug Combivir was driven down to marginal cost by competition:
A) fewer people would use Combivir.
B) there would be less incentive to invest in creating the next improved AIDS drug.
C) deadweight loss would increase.
D) GlaxoSmithKline's profits would increase.

Question

Quizplus · Accepted Answer

If the price of Combivir is driven down to marginal cost, GlaxoSmithKline's profits from the sale of the drug will decrease. As a result, there will be less incentive for the company to invest in research and development for the creation of the next improved AIDS drug. This could ultimately lead to a reduction in the supply of new and effective AIDS drugs available to the market, potentially harming patients who rely on these medications.

If the Price of the AIDS Drug Combivir Was Driven