# Economics

posted by .

Mirk Labs is a British pharmaceutical company that currently enjoys a patent monopoly in Europe, Canada, and the United States on Zatab (pronounced zay-tab), an allergy medication. The global demand for Zatab is:
Qd=15.0-0.2P
Where Qd is annual quantity demanded (in millions of units) of Zatab, and P is the wholesale price of Zatab per unit. A decade ago, Mirk Labs incurred \$60 million in research and development costs for Zatab. Current production costs for Zatab are constant and equal to \$5 per unit.
a. What wholesale price will Mirk Labs set? How much Zatab will it produce and sell annually? How much annual profit does the firm make on Zatab?
b. The patent on Zatab expires next month, and dozens of pharmaceutical firms are prepared to enter the market with identical generic versions of Zatab. What price and quantity will result once the patent expires and competition emerges in this market? How much consumer surplus annually will allergy sufferers who take Zatab gain?
c. Calculate the annual dadweight loss to society due to the drug firm's market power in Zatab. What exactly does this deadweight loss represent?
d. Given your answer to part c, would it be helpful to society for competition authorities in Europe, Canada, and the United States to limit entry of generic drugs to just five years for new drugs? Why or why not?

• Economics -

Take a shot. What do you think?
Hint for a: find Q where MC=MR.
for b: find Q where MC=demand.

• Economics -

I'm sorry, I just don't understand this at all. I don't know what to plug in in this problem. It would have to be the \$60 million and \$5 per unit, correct? I just don't know where. This is the only problem in the chapter we were assigned and there are no examples like it in the text. You are kind to help me, but I don't know what to plug in. Thank you for helping. :)

## Similar Questions

1. ### Economics

Demand function for Zatab: Qd = 15.0 - 0.2P Q = annual quantity demanded P = wholesale price of one Zatab unit Production cost per unit: \$5 Mirk Lab incurred a \$60 million R&D cost a decade ago 1: What wholesale price will Mirk Labs …
2. ### Managerial Econ

Mirk Labs is a British pharmaceutical company that currently enjoys a patent monopoly in Europe, Canada, and the United States on Zatab (pronounced zay-tab), an allergy medication. The global demand for Zatab is: Qd=15.0-0.2P Where …
3. ### Economics Today the micro view 13th edition

A British pharmaceutical company spent several years and considerable funds on the development of a treatment for HIV patients. Now, with the protection afforded by patent rights, the company has the potential to reap enormous gains. …
4. ### economics

Mirks labs is a British pharmaceutical company that currently enjoys a patent monopoly in Europe, Canada and the United States, on Zatab (pronounced zay-tab), an allergy medication. The global demand for Zatab is Qd = 15.0-0.2P Where …
5. ### Managerial Economics

Mirk Labs is a British pharmaceutical company that currently enjoys a patent monopoly in Europe, Canada, and the U.S on Zatab, an allergy medication. The global demand for Zatob is Qd=15.0-0.2P where Qd is annual quantity demanded …
6. ### economics

Why might it be appropriate for the government to allow a pharmaceutical company to have a monopoly in the production of a drug?
7. ### managerial economics

Qd=15.0-0.2P where Qd is annual quantity demanded in millions of units and P is the wholesale price. Incurred cost of \$60 million. Production cost is \$5/unit. (1) what is wholesale price, (2) production annually, (3) annual profit?
8. ### Managerial Economics

Mirk Labs is a pharmaceutical company that currently enjoys a patent monopoly in Europe, Canada, and the U.S. on Zatab, an allergy medication. The global demand for Zatab is Qd= 15.0- 0.2 P where Qd is annual quantity demanded (in …
9. ### Managerial Economics

Mirk Labs is a pharmaceutical company that currently enjoys a patent monopoly in Europe, Canada, and the U.S. on Zatab, an allergy medication. The global demand for Zatab is Qd= 15.0- 0.2 P where Qd is annual quantity demanded (in …
10. ### Managerial Economics

Mirk Labs is a pharmaceutical company that currently enjoys a patent monopoly in Europe, Canada, and the U.S. on Zatab, an allergy medication. The global demand for Zatab is Qd= 15.0- 0.2 P where Qd is annual quantity demanded (in …

More Similar Questions