The annual demand for a new drug HealthyHeart is shown in the diagram below. The one-time cost
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The one-time cost of developing HealthyHeart is $2,000. Once the drug has been developed, the marginal cost of an additional pill is $2.
a. Show that if the government gives the company that develops HealthyHeart a 20-year patent the company will be able recover the $2,000 it spent to develop the drug.
b. Find the total deadweight loss over the 20-year life of the patent.
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