Question

After the patent runs out on a brand name drug, generic drugs enter the market. What happens next in the market? a. Price decreases, and total surplus decreases. b. Price increases, and total surplus increases. c. Price increases, and total surplus decreases. d. Price decreases, and total surplus increases.

Answer 1

d. Price decreases, and total surplus increases.

Step-by-step explanation:

In the case when the patent runs the name of the brand i.e. drug, and the generic drugs entered into the market so here the price would be reduced and on the other hand the total surplus i.e. consumer and producer would rise.

Therefore as per the given situation, the option d is correct

hence, all the other options are incorrect