ECON 5315_Homework3_Ch3 (1).docx - Homework for Chapter...

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Homework for Chapter 3 (adapted from end-of-chapter questions) 10 points possible 3. By virtue of a contract, s ince 2014 Pfizer has held exclusive rights - in the U.S., Europe and the rest of the world - to distribute AstraZeneca ’s over-the-counter NEXIUM (esomeprazole magnesium), a leading prescription drug currently approved to treat the symptoms of gastro-esophageal reflux disease (GERD). Suppose Pfizer s monopsony and monopoly power from this exclusive deal for NEXIUM is earning unexpectedly huge profits. Is this sufficient justification for AstraZeneca to buy out Pfizer ? Explain. (1 point)
4. In each of the following situations, why are firms likely to benefit from vertical integration? (1 point each) a. A grain elevator

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