1 Patents 1.1 Briefly explain the tradeoff between consumer surplus and innovation. 1.2 If the United States cut the patent window in half, would this have any effect on consumers in England? Why? 1.3 Consider a firm that has a patent on a drug and sells in two markets, the United States and Canada, where drugs can not be resold across the border. The marginal cost of producing the drug is $20. The Demand curve in the United States is P=100Q and in Canada it is P=5021Q. Show graphically the monopolist's pricing decision. In which country will consumers face a higher price? What assumptions are necessary for this model to hold? Finally, if every consumer could purchase from either American or Canadian markets, would this be a pareto improvement? 1 Patents 1.1 Briefly explain the tradeoff between consumer surplus and innovation. 1.2 If the United States cut the patent window in half, would this have any effect on consumers in England? Why? 1.3 Consider a firm that has a patent on a drug and sells in two markets, the United States and Canada, where drugs can not be resold across the border. The marginal cost of producing the drug is $20. The Demand curve in the United States is P=100Q and in Canada it is P=5021Q. Show graphically the monopolist's pricing decision. In which country will consumers face a higher price? What assumptions are necessary for this model to hold? Finally, if every consumer could purchase from either American or Canadian markets, would this be a pareto improvement