Microeconomics Class

Tradeoffs to High-Priced Cancer Drugs

1) There are several factors that could be listed that affect the cost of cancer drugs. An

important factor would be research and development. Research and development play a key role

because they spend and estimated billions of dollars on test to determine many outcomes

including determining if the product is safe thus able to cure. As stated by R. Glenn Hubbard,

“The more funds a firm has devoted to research and development during a given year, the

smaller the amount of useful knowledge it receives from each additional dollar- and the greater

the opportunity cost of using the funds in that way.” The research and developers know that

there are many of people out here that need the medication, which would result in less fortunate

families to make drastic measures to decided choices among the goods and services to buy.

2) The extent that would increase government involvement in health insurance or drug research

would be the fact of price increase and this situation effecting government assistance such as

Medicaid or Medicare. By the increasing dollar amount of health insurance or drug research, it

could force a reduction in spending on other government programs. If this event were to occur,

there would be major cut backs for people who receive assistance funded by the government. I

feel that the price for health insurance or drug research for the consumers to be set at a price

were as anyone could achieve it. If all they are looking at is the money, there would be a better

investment and more money coming in if the less fortunate consumers could get it. Government

money is redisputed in many ways so I think they could come out with some type of conclusion

that could help and benefit everyone.

3) The cost of medical therapy relate to the concept of scarcity really deals with people having

to make very important sacrifices. People would have to come up with the...