2
PRESCRIPTIONS DRUGS
Question one
Several advantages are related to marketing drugs to the public. One of the benefits is that it
improves or increases the price transparency thus lowering the health care costs. The healthcare
providers keep information regarding drugs prices private. Therefore, if they advertise the drugs
directly to the public, the public will have a transparency of the price, and then they shop from
the lower prices and thus resulting to lowering the price of health care ("American Economic
Association," n.d.).
The other advantage is that the healthcare providers will compete and one way of competing is
offering the best care in the market. Therefore, quality of care will improve and thus patients will
have the best drugs and the best services ("American Economic Association," n.d.).
However, some disadvantages are associated with the marketing the drugs directly to the public.
One of the disadvantages is that the information provided in the advertisement is oversimplified
and vague. As a result, there will be inappropriate prescriptions. The negative externalities of
advertising are high as people might start buying drugs and use in overdose due to inappropriate
prescriptions ("Externalities: The Concise Encyclopedia of Economics | Library of Economics and
Liberty," n.d.). The other disadvantage is the drug abuse will increase as a result of the
advertisement.
Question 2
If the bank had the right to patent a new type of personal loan the consumers could be affected in
several aspects. One of the aspects is that the consumers could be exploited concerning price. On
the patenting, the banks become the sole provider of that loan and therefore, regulating it would
be a problem. The consumer becomes the price takers in that they don’t dictate the price since
