Managerial Economics: Applications, Strategy and Tactics 12th Edition by James McGuigan, Charles Moyer, Frederick Harris

Exercise 5

In 2006, firms in the drug industry earned an average return on net worth of 22 percent, compared with an average return of 14 percent earned by over 1,400 firms followed by Value Line. Which theory or theories of profit do you think best explain(s) the performance of the drug industry