midterm question

3. Monopolies (10 - 2 per subquestion) A pharmaceutical company is considering whether to invest in a new vaccine for Covid-19. Its market research shows that the demand for vaccines each year can be characterized by the function D(p) = 102-2p. The cost function of the vaccine is C = 2q. a) Assume that the firm is in a competitive market. What would be the price and output level of the firm? b) Assume that the firm ends up being a monopoly for Covid-19 vaccines. What will be the price and output level? c) Graphically show the equilibriums in parts a and b. d) Graphically show and calculate the deadweight loss if the government allows for a monopoly by providing a patent to this firm alone. e) Now assume that the firm has to make a research investment of 10000 USD. How many years would a patent need to last for this firm to try to invest this vaccine