A pharmaceutical company, Drugs 'R Us, develops a new drug, Worrynomore, that cures a prevalent and previously untreatable condition called hypochondriatus. No other drug has been shown to be effective in treating this disease. Drugs 'R Us files an application for a utility patent with the US Patent & Trademark Office (PTO). The PTO is satisfied that Worrynomore has satisfied the requirements for a patent (it is new, useful, and nonobvious), and issues the patent.

a. How long does the typical utility patent last? (Hint: The textbook says that the patent runs for seventeen years from the date the patent is issued by the PTO, but this is not correct because the law was changed about thirty years ago). Why is this the length of a patent term? Why not longer? Why not shorter?

b. Suppose you are working as a consultant for Drugs 'R Us. The firm hired you to determine the optimal price and quantity of Worrynomore. complete a study of the relevant market and estimate the demand function to be: = 50 2Q