Please I Would like a tutor to fully help answer these questions for me.Thank you.

NB : Pleasedon't use ChatGPT to answer these questions, if you have no idea about these questions leave it for another tutor to answer. After providing an answer I will cross check whether it was generated using ChatGPT or not and I will rate the answer as bad and report to course hero if I cross check and find the answer is generated through chattGPT.

Again, please I would like you to follow the order on how the question is asked and provide an answer. Thank you for your help.

NB: For every question you will be answer on each of the graph, I would like you to to state the question number to make it more easy for me to understand. I would also like you to provide a brief explanation to make it more understandable. Thank you.

NB: one of the drugs I selected from the material we read is Januvia. I would like you to use this drug for the question 1 & 2

Economics 150 - Spring, 2024 In Class Question - Patents and Market Power 1. Pharmaceutical patents give drug manufacturers monopoly power. Pharmaceutical prices are currently growing twice as fast as other significant inputs to health care and pharmaceutical reimbursement is a significant contributor to rising health insurance prices. a. What is a patent and how does it work to give firms monopoly power? b. Using a standard monopoly market graph, select one of the drugs from the material read for today to model the impact of the patent for that drug. Begin by drawing and labeling the following on the graph (save ATC for later) i. Demand ii. Supply iii. Monopoly profit maximizing price (PM*) - include the appropriate number on your graph. iv. Competitive market price (Ppc*) - include an appropriate number on your graph v. Monopoly profit maximizing quantity (QM*) vi. Competitive market quantity (Qpc*) vii. Dead weight loss (no number, just shade) C . Explain the dead weight loss associated with the market failure by shading the DWL on your graph and explaining in text what is "lost" as a result of the monopoly power. d. Now, add in an ATC line that shows the drug manufacturer making long run economic profit at QM*. Shade the area of economic profit on your graph. e. Making reference to (a-d) above, explain the arguments against pharmaceutical patenting. f. How would this market situation change if generic/off-patent drugs were allowed to enter the market? 2. A solution to this market situation would be to allow the government to exert monopsony power and negotiate the price that it would pay for this drug. a. What is a monopsony? b. How does monopsony power affect price and why is the monopsonist able to exert this power? C . What positive impact could the monopsony have on the situation described in question (1), above? Redraw the graph from question (1), labelling the following: i. Demand ii. Supply iii. ATC iv. Monopoly profit maximizing price (PM*) - include the appropriate number on your graph. v. Monopsonist negotiated price (PMS) - include an appropriate number on your graph vi. Monopoly profit maximizing quantity (QM*) vii. Monopsonist negotiated market quantity (QMS) viii. Monopoly dead weight loss (no number, just shade) ix. Monopsonist negotiated dead weight loss (no number, just shade) d. What happens to the DWL under the monopsonist negotiated price, in this example? Explain. e. What happens to the excessive monopolist profit under the monopsonist negotiated price, in this example? Explain. f. Making reference to (c-e), explain the argument for government negotiation of pharmaceutical prices.3. Pharmaceutical companies argue that patents are necessary to ensure that drugs to treat rare illnesses are developed. The arguments focuses on the high research and development costs associated with new drug development and the competitive disadvantage that firms who incur these costs have in a perfectly competitive marketplace without patents. Using a standard monopoly market graph, select one of the drugs from the material read for today to model the impact of the patent for that drug. Begin by drawing and labeling the following on the graph (save ATC for later) i. Demand ii. Supply iii. Monopoly profit maximizing price (PM*) - include the appropriate number on your graph. iv. Competitive market price (Pec*) - include an appropriate number on your graph v. Monopoly profit maximizing quantity (Qu*) vi. Competitive market quantity (Qpc*) b. Now, add average cost (ATC) to your graph assuming that the costs of production are much higher for the patented drug than shown in question (1) due to high R&D costs. Shade the economic loss that the firm would face at the competitive market price and quantity. c. Making reference to your graph above, i. Explain why pharmaceutical patenting may be needed and what would happen if pharmaceutical patents were no longer allowed. ii. Explain who loses from the removal of patents and how they would lose. 4. Pharmaceutical companies also argue that allowing the government to negotiate drug prices will lead to long run negative outcomes for society. a. If the government were to be able to negotiate drug prices, would the pharmaceutical market remain perfectly competitive? Explain, using the appropriate economic terminology. b. Draw a graph depicting the potential societal loss from government drug price negotiation. Draw and label the following on the graph: i. Demand ii. Supply iii. Competitive market price (Ppc*) - include an appropriate number on your graph iv. Competitive market quantity (Qpc*) v. Monopsony profit maximizing price (PMS*) vi. Monopsony profit maximizing quantity (QMS*) C. Who gains from government negotiation, according to the graph? Circle those individuals on the graph and explain how they gain. d. Who loses from government negotiation, according to the graph? Circle those individuals on the graph and explain how they lose. e. What type of evidence would indicate that this potential problem is actually being observed in society?1. Pharmaceutical Patents and Monopoly Power: a. A patent grants exclusive rights to an inventor to produce and sell a product for a limited period, typically 20 years. This exclusivity allows firms to control the supply of a product, leading to monopoly power. b. Here you would draw a standard monopoly graph with demand, supply, monopoly profit maximizing price and quantity, and competitive market price and quantity. The shaded area represents deadweight loss due to monopoly power. c. Deadweight loss occurs because the monopoly restricts output below the socially optimal level, leading to a loss of consumer and producer surplus. d. Adding the average total cost (ATC) curve shows the economic profit earned by the monopolist, shaded as economic profit. e. Arguments against pharmaceutical patenting include higher drug prices, limited access to essential medications, and reduced incentives for innovation. f. Allowing generic/off-patent drugs to enter the market would increase competition, leading to lower prices and potentially reducing deadweight loss. 2. Government Exerting Monopsony Power: a. A monopsony is a market situation where there is only one buyer. b. Monopsony power allows the buyer to negotiate lower prices due to its dominance in the market. c. Redraw the previous graph, but this time with a monopsonist negotiated price and quantity. Shaded areas represent deadweight loss under both monopoly and monopsonist negotiation. d. Deadweight loss typically decreases under monopsonist negotiation due to lower prices and increased quantity. e. Excessive monopolist profit decreases as the negotiated price reduces the monopolist's ability to charge high prices. f. Government negotiation of pharmaceutical prices can lead to lower prices, increased access to medication, and reduced deadweight loss. 3. Pharmaceutical Patents and R&D Costs: a. The graph would depict monopoly power due to patents, with higher costs reflected by the ATC curve. Without patents, firms may lack incentives to invest in costly R&D, potentially hindering innovation. b. Economic losses occur when firms cannot recoup high R&D costs in a competitive market without patents. . Pharmaceutical patenting is argued to be necessary to incentivize firms to invest in R&D for drug development. Removal of patents may lead to reduced innovation and fewer drugs for rare illnesses. d. Consumers may lose from the removal of patents if it reduces access to innovative drugs. Additionally, society may lose if the removal of patents stifles innovation in pharmaceuticals. 4, Government Negotiation of Drug Prices: a. Government negotiation would introduce a form of market intervention, making the market less perfectly competitive. b. Draw a graph showing the potential societal loss from government negotiation, with circles indicating who gains and loses. . Consumers may gain from lower drug prices negotiated by the government, leading to increased access to medication and potentially lower healthcare costs. d. Pharmaceutical companies may lose revenue and incentives for innovation if government negotiation reduces prices below what they consider fair. e. Evidence of societal loss from government drug price negotiation could include reduced pharmaceutical innovation, limited drug availability, or increased healthcare costs elsewhere in the system