Economics
posted by Nathan .
Sorry, it's long. I've tried everything to solve this, I have no clue how they got any of the MR figures, I calculated MR and I got 0.5. Help please.
* A drug company currently sells 3 million AIDS treatments in rich countries at P = $80 per treatment.
* In order to sell 6 million AIDS treatments in poor countries the drug company would have to lower price to $30 per treatment.
* Marginal cost is constant and equal to $10 per treatment in both countries.
* If the drug company cannot prevent resale between rich and poor countries then the marginal revenue per treatment of increasing output from 3 million (serve rich only) to 9 million (serve both rich and poor) is equal to___
a. $30 per treatment which is greater than the marginal cost of $10 per treatment and thus implies that profits will rise if the poor buyers are served.
b. $5 per treatment which is less than the marginal cost of $10 per treatment and thus implies that profits will fall if the poor buyers are served.
c. $30 per treatment which is less than the marginal revenue of $80 per treatment received from the rich buyers and thus implies that profits will fall if the poor buyers are served.
d. $30 per treatment which is greater than zero and thus implies that profits will rise if the poor buyers are served.
e. $20 per treatment which is greater than the marginal cost of $10 per treatment and thus implies that profits will rise if the poor buyers are served.

Marginal revenue is also known as Price (P). So, in rich countries MR=80. If it serves the poor countries MR=30. If it serves the poor countries with a goal of 6million treatment and since it cannot prevent resale, price (MR) in the rich country also drops to 30.
Now then, MC is a constant 10. If it only serves the rich country, MR=80, meaning profit per treatment is 70. At 3million sales, total profit becomes 210million. If it serves both rich and poor, profit per treatment drops to 20. Total profit would be 9*20 = 180million.
While I don't like the wording, c) seems to be the only possible correct answer. 
Thanks for the help. I did end up getting the answer right, miscalculated the first couple times I did it.
MR = change in TR/ change in q
change in tr= ((9mil*30)(3mil*80)
=270mil240mil
=30 mil
change in q= 9mil3mil
=6mil
MR=30/6
=$5
Since 5 is less than mc, you have gone past the profit max. point and profit will fall.
So B.
Respond to this Question
Similar Questions

Economics/social studies
This isn't an example of an invisible hand is it? 
Geometry
1. MO bisects LMN, LMN = 5x23, LMO = x+32. Find NMO. >>I got the answer 45.75 but I got it wrong. I do not know how to solve this question and I have tried all that I know. Please help.. 
Math add subtract fractions
Can you check my answers: 2) 5/8  1/4 i got: 3/8 4) 1 1/2  2 4/5 i got: 7/10 6) 5 7/8 + 3 5/12 i got: 9 7/24 10) 3 1/2 + 2 2/5 i got: 5 9/10 18) 6 7/12 + 4 5/12 i got: 11 20) 7 9/10 + 3 3/10 i got: 11 1/5 22) 18 3/8 + 11 6/7 i got: … 
math exponents
i need to write each expression as a product of the same factor: * = multiply can you check these please a^2 i got a*a 19^3 i got 19*19*19 6^2 i got 6*6*1 x^3 i got x*x*x*1 (5)^4 i got (5)*(5)*(5)*(5)*(5) 4^3 i got 4*4*4 … 
MATH
i need to write each expression as a product of the same factor: * = multiply can you check these please a^2 i got a*a 19^3 i got 19*19*19 6^2 i got 6*6*1 x^3 i got x*x*x*1 (5)^4 i got (5)*(5)*(5)*(5)*(5) 4^3 i got 4*4*4 … 
Quick math help
Can someone please check my math Hw? Thank you!! Solve each system by elimination. 1. 8x+7y=1 9x7y=2 I got (1,1) 2. 4x+3y=1 4x7y=13 I got (2,2) 3. 7x6y=21 x6y=3 I got (3,0) 4. 2x+3y=16 2x5y=16 I got (8,0) 5. 7x+2y=13 
Economics (Net Present Value
Approximately 14 million Americans are addicted to drugs and alcohol. The federal government estimates that these addicts cost the U.S. economy $300 billion in medical expenses and lost productivity. Despite the enormous potential … 
finance
Jiminy's Cricket Farm issued a 30year, 7.2 percent semiannual bond 9 years ago. The bond currently sells for 85.5 percent of its face value. The book value of this debt issue is $107 million. In addition, the company has a second … 
Maths
Hey! I have this problem  i'm currently working on Quadratics at school, and i got homework. One of the questions is 18^2+2px+32. I have to find the Value of P, the answer i got is P>+24. Can someone please confirm this is correct? 
Algebra
Hello again! I've got two questions I'm stuck on in an algebra worksheet. 1. Solve the equation: 2𝑦 + 5 = 1/2(4𝑦 + 8) (I really don't know how to solve these correctly, I've tried everything.) 2. The density of an object …