(B) Clinical trials of new drugs, which occur after the patent is granted and before the new drug can be marketed, often now take as long as 10 years to complete.
(C) There are several industries in which the ratio of research and development costs to revenues is higher than it is in the pharmaceutical industry.
(D) An existing patent for a drug does not legally prevent pharmaceutical companies from bringing to market alternative drugs, provided they are sufficiently dissimilar to the patented drug.(B)
(E) Much recent industrial innovation has occurred in products—for example, in the computer and electronics industries—for which patent protection is often very ineffective.
Questions 7-8 are based on the following.
Bank depositors in the United States are all financially protected against bank failure because the government insures all individuals’ bank deposits. An economist argues that this insurance is partly responsible for the high rate of bank failures, since it removes from depositors any financial incentive to find out whether the bank that holds their money is secure against failure. If depositors were more selective, then banks would need to be secure in order to compete for depositors’ money.
7. The economist’s argument makes which of the following assumptions?
(A) Bank failures are caused when big borrowers default on loan repayments.
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