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Path: Wentso QUESTION 4 A pharmaceutical company "Alfa" considers developing a new drug against coronavirus. The annual demand for the new drug is Q= 200 10 golets 2p, where p is the price of a prescription drug, and Q is the quantity demanded by patients. The cost of producing an extra pill is constant and equals $20. (9 points) a) How much should the company "Alfa" charge for this drug? What is the annual profit? (1.5 points) Assume the government grants the new drug's patent for one year. point) b) What will happen after this year? How will the profit of a company change? Calculate a new price and profit of the company " Alfa" .(1 c) Assume the company wants to recoup its investments in 3 years. Will it invest to the development of this drug if the total research development costs are $3000, and the interest rate is 4%? (2 points) Assume that consumers are impressed with the effect of this drug and decide to use it to produce their health during the first year (you should use the price from part a). The health production function is given in the following way: HS = sqrt(D*M), where M stands for medical treatment. d) Calculate an optimal level of D and M, if the price of M is $20 and an individual's income is $2000. (2.5 points) e) Assume that an individual has insurance with a 30% coinsurance rate for medical care. How will initial allocation change? (2 points) T T T F Paragraph + Arial $ 3 (12pt) TT. 2 02 1 X D D Q DOE WITH CSS Ofx .. Mashups