After obtaining a patent for developing a new drug, a pharmaceutical company becomes a monopoly in...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
After obtaining a patent for developing a new drug, a pharmaceutical company becomes a monopoly in the market for the new drug. The following graph shows the demand and costs that the company faces. Price Pa | Pz Pz P MR MC A AC Demand 0 Q Q2 Q3 Q Quantity 7. Refer to Figure 8. If the company is currently producing quantity Q1, how and why should it change its production to maximize profits? A. It should not change its production because Q1 is the profit-maximizing quantity. B. It should increase production because MR > MC at Q1. c. It should increase production because MR < MC at Q1. D. It should decrease production to obtain a higher price and MR. After obtaining a patent for developing a new drug, a pharmaceutical company becomes a monopoly in the market for the new drug. The following graph shows the demand and costs that the company faces. Price Pa | Pz Pz P MR MC A AC Demand 0 Q Q2 Q3 Q Quantity 7. Refer to Figure 8. If the company is currently producing quantity Q1, how and why should it change its production to maximize profits? A. It should not change its production because Q1 is the profit-maximizing quantity. B. It should increase production because MR > MC at Q1. c. It should increase production because MR < MC at Q1. D. It should decrease production to obtain a higher price and MR.
Expert Answer:
Answer rating: 100% (QA)
The answer is B The company should increase production because MR MC at Q1 At Q1 the ... View the full answer
Posted Date:
Students also viewed these economics questions
-
A bond is priced at 950, giving an annual effective yield to maturity of 9%. At 9%, the derivative of the price of the bond with respect to the yield rate is -4, 750. Calculate the Macaulay duration...
-
CANMNMM January of this year. (a) Each item will be held in a record. Describe all the data structures that must refer to these records to implement the required functionality. Describe all the...
-
1. How strong are the competitive forces confronting J. Crew in the market for specialty retail? Do a [Michael Porter] five-forces analysis to support your answer. (see chapter 3 in the textfor...
-
If a ij is symmetric and b ij is antisymmetric, prove in general that the product a ij b ij is zero. Verify this result for the specific case by using the symmetric and antisymmetric terms from...
-
Name at least two practice areas in Checkpoint and describe the contents briefly.
-
How do inflation and taxes affect earnings on savings?
-
It has been suggested that too much information might be as bad as too little information for users of annual reports. Explain.
-
Three point charges are placed on the y-axis: a charge q at y = a, a charge - 2q at the origin, and a charge q at y = -a. Such an arrangement is called an electric quadrupole. (a) Find the magnitude...
-
olaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 46,000 Rets per year. Costs associated with this level of production and...
-
A firm's cost of capital is 10%. The firm's book equity is $120 million, and its 10 million shares (common-only) are selling at $20/share. Net income was $19.75 million this year, with a tax rate of...
-
A company's product sells for birr 150 and has variable costs of birr 60 associated with the product. What is its contribution margin ratio?
-
Capital Budgeting A company is considering four capital budgeting projects. Data relative to each is given below. Project A has a life of 8 years & B has a life of 7 years. Project C has a 6 year...
-
Look at the APPLEs company's debt (both short-term and long-term). What are the major types of debt the company uses to fund its operations? What is the average cost (rate) on the debt? (Please state...
-
Given that 8g(x)+7x sin(g(x)) = 8x + 41x - 42 and g() = 0, find g(). d' (33) =
-
What would be couple good Validating Sources of the bibliography of the main authors, artist or publishers validating on the subject of "Face in the Mirror"? Main Authors is Mohsin Hamid's, Andersand...
-
Problem 8 A coin is tossed twice. Let X denote the number of heads on the first toss and Y the total number of heads on the 2 tosses. If the coin is unbalanced and a head has a 30% chance of...
-
A seasonal index may be less than one, equal to one, or greater than one. Explain what each of these values would mean.
-
Two customers stay in identical budget hotel rooms in the same hotel, on the same night; one has paid 29, whilst the other has paid 59. Using revenue management explain this situation.
-
On a specific flight there are 240 seats available, at a maximum price of 200 per seat. However only 180 seats are sold, with an average achieved ticket price of 110. Calculate the yield management %...
-
Define the two strategic drivers of revenue management.
Study smarter with the SolutionInn App