Question: Just need graph two solved Expert Q&A Done In 1987, Eli Lilly and Co. invented fluoxetine (an antidepressant), and for 14 years, they had a

Just need graph two solved

Just need graph two solved Expert Q&A Done In 1987, Eli Lilly

Expert Q&A Done In 1987, Eli Lilly and Co. invented fluoxetine (an antidepressant), and for 14 years, they had a patent on the production of fluoxetine and sold it under the brand name Prozac. Graph 1 shows Eli Lilly's marginal cost (MC) curve, average variable cost (AVC) curve, average total cost (ATC) curve, demand (D) curve, and marginal revenue (MR) curve while this patent is in effect. a. Label all of the curves on Graph 1. (5 points) b. Label on the graph and indicate in the space provided the quantity (Qo) that the firm will sell and the price (Po) that Eli Lilly will charge for Prozac. (4 points) c. Clearly label on the graph Eli Lilly's profits from Prozac (To). (2 points) d. Label on the graph and indicate in the space provided the efficient quantity (QE). (2 points) e. Label on the graph any deadweight loss (DWL) if it exists. (2 points) 10 Graph 1 Qo = Po = QE = N Q (in millions) In 2001, Eli Lilly's patent expired, allowing many firms to produce and sell fluoxetine (generic versions of Prozac, all of which are identical). f. On Graph 2, show the market for fluoxetine after the patent expires. Label the demand (D) curve and the supply (S) curve. I have provided you with one. You must sketch the other, doing so in any way you choose. Once you have sketched the missing curve, label the quantity (Q, ) and the price (P1) in the market for fluoxetine. (5 points) Graph 2 Q (in millions) g. Based on your result in (f) and assuming Eli Lilly's cost curves have not changed, label on Graph 1 the quantity (Q2) Eli Lilly chooses to produce after the expiration of the patent. (3 points) h. Based on your responses in (f) and (g), what will Eli Lilly choose to do in the long run? CIRCLE ONE: Eli Lilly will [ produce / shut down ] in the long run. (2 points)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!