Saturday

March 28, 2015

March 28, 2015

Posted by **Anonymous** on Friday, April 30, 2010 at 12:40am.

a. Illustrate on a diagram the following curves: demand, marginal cost, and marginal revenue.

b. If the firm receives a monopoly patent, what price does it charge and how much does it sell? Compute the firm’s surplus (profit) from selling the drug, not including fixed costs.

c. Suppose the fixed cost of developing the new drug is $6.5 million. Will the firm want to invest in developing the drug? Is the firm’s decision socially efficient?

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