chapter 1

Question 1

______ are those necessary and beneficial commodities that private entities will not supply because there is no incentive for a private entity to supply them.

Answer 1

Public goods

Question 2

_________ exist when the production or consumption of a good affects someone who does not fully consent to the effect and when the costs of the good are not fully incorporated into the consumer price

Answer 2

externality

Question 3

_________ occur when the fixed costs of providing a good are high relative to the variable costs

Answer 3

natural monopoly

Question 4

___________ leads to market failures when the consumer is uninformed about the true value of a good

Answer 4

information asymmetry

Question 5

What are the 4 types of market failures that are relevant to drug use and serve as justification for government regulation of drug use.

Answer 5

1. public goods
2. externalities
3. natural monopoly
4. information asymmetry

Question 6

In order to be a valid regulation it must generally meet three legal tests:

Answer 6

1. The regulation must be within the scope of the agencies authority
2. The regulation must be based on a statute that gives the agency the authority to promulgate the regulation
3. The regulation must bear a reasonable relationship to the public health, safety, and welfare

Question 7

The body of law developed from judicial opinions is called ______

Answer 7

common law

Question 8

Orphan drugs and vaccines are examples of what type of market failure?

Answer 8

public goods

Question 9

The overuse of antibiotics in drug therapy is an example of what type of market failure?

Answer 9

externality

Question 10

In drug therapy, the cost of demonstrating the safety and efficacy of a new drug is usually far greater than the cost of providing the new drug once it has been shown to be safe and effective. This is an example of what type of market failure?

Answer 10

natural monopoly

Question 11

Information about the benefits and detriments of medications does not flow freely within the lay public because it often is difficult for untrained individuals to understand these benefits and detriments. This would be an example of what market failure?

Answer 11

Information asymmetry

Question 12

A civil action lawsuit is when ________

Answer 12

one private party (the plaintiff) sues another private party(the defendant) alleging an injury

Question 13

A criminal action lawsuit is when __________

Answer 13

the federal government takes action for a violation of a statute

Question 14

An administrative action lawsuit may occur when ________

Answer 14

a pharmacist has violated a statute or regulation or has committed an act that, in the opinion of the agency, warrants an investigation

Question 15

In a civil trial, the plaintiff must establish proof by a preponderance “Beyond a reasonable doubt” of the evidence and must prove “standing”. This means the plaintiff must show two things:
1.
2.

Answer 15

The challenged conduct has caused the plaintiff injury AND the plaintiffs interest is a legally protectable interest