Question

If the government deems a newly-invented drug to be truly original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years.

a. True
b. False

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry.

a. True
b. False

Answer 1

1).

If the government deems a newly invested drug to be original, the pharmaceutical company is given the exclusive right to manufacture and sell the drug for 50 years, => FALSE.

Since such exclusive right can’t be for “50 years”, it is at most for 20 years.

2).

If the ABC company owns the exclusive rights to mine land in Afghanistan for Lapis Lazuli, a rare stone used in jewelry which is found only in Afghanistan, the company benefits from a barrier to entry, => TRUE.

Since it is only available in the Afghanistan, => by creating barriers the company can capture majority of the market share and can increase it profit.