Back to Assignment Attempte 2. The market for EpiPens Consider the pharmaceutical company Mylan that produces epinephrine injection devices called EpiPens. In the presence of other firms producing substitutes for this good, the price of EpiPens is $150. Now suppose that competitors to Mylan no longer produce epinephrine injection devices, so Mylan now has pricing power in this market. As the economist on staff at Mylan, you are charged with the task of figuring out what your company's new pricing strategy should be. The following graph shows the marginal cost (MC), which is assumed to be constant, and the average total cost (ATC) of Mylan. The graph also shows the demand curve (D) for EpiPens and the marginal revenue curve (MR) once the firm has market power. On the graph, use the grey point (star symbol) to indicate the quantity of EpiPenis demanded if Mylan continues to charge $150. Dashed drop lines will automatically extend to both axes. PRICE (Doliars per EpiPen 1000 800 200 100 0 Keep the Highest/3 f True (2 O False 5 H QUANTITY (Thousands of EpiPenis) MR 4 ATC D. MC Ir Mylan continues to charge $150 per EpiPen, Mylan will earn 10 $150 .+ 1* Profit Max ATC at Profit Max Profit (?) True or False: Given the demand curve for EpiPens, you should tell Mylan's CEO that total revenue will increase if she raises the price of EpiPens because the demand curve in this region is relatively inelastic.. economic profit. On the previous graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity. Dashed drop lines will automatically extend to both axes. On the previous graph, use the purple point (diamond symbol) to indicate the average total cost at the profit-maximizing quantity. Then use the green rectangle (triangle symbols) to shade the area indicating the firm's economic profit.
Back to Assignment Attempte 2. The market for EpiPens Consider the pharmaceutical company Mylan that produces epinephrine injection devices called EpiPens. In the presence of other firms producing substitutes for this good, the price of EpiPens is $150. Now suppose that competitors to Mylan no longer produce epinephrine injection devices, so Mylan now has pricing power in this market. As the economist on staff at Mylan, you are charged with the task of figuring out what your company's new pricing strategy should be. The following graph shows the marginal cost (MC), which is assumed to be constant, and the average total cost (ATC) of Mylan. The graph also shows the demand curve (D) for EpiPens and the marginal revenue curve (MR) once the firm has market power. On the graph, use the grey point (star symbol) to indicate the quantity of EpiPenis demanded if Mylan continues to charge $150. Dashed drop lines will automatically extend to both axes. PRICE (Doliars per EpiPen 1000 800 200 100 0 Keep the Highest/3 f True (2 O False 5 H QUANTITY (Thousands of EpiPenis) MR 4 ATC D. MC Ir Mylan continues to charge $150 per EpiPen, Mylan will earn 10 $150 .+ 1* Profit Max ATC at Profit Max Profit (?) True or False: Given the demand curve for EpiPens, you should tell Mylan's CEO that total revenue will increase if she raises the price of EpiPens because the demand curve in this region is relatively inelastic.. economic profit. On the previous graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity. Dashed drop lines will automatically extend to both axes. On the previous graph, use the purple point (diamond symbol) to indicate the average total cost at the profit-maximizing quantity. Then use the green rectangle (triangle symbols) to shade the area indicating the firm's economic profit.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Attempte
2. The market for EpiPens
Consider the pharmaceutical company Mylan that produces epinephrine injection devices called EpiPens. In the presence of other firms producing
substitutes for this good, the price of EpiPens is $150.
Now suppose that competitors to Mylan no longer produce epinephrine injection devices, so Mylan now has pricing power in this market. As the
economist on staff at Mylart, you are charged with the task of figuring out what your company's new pricing strategy should be.
The following graph shows the marginal cost (MC), which is essumed to be constant, and the average total cost (ATC) of Mylen. The graph also shows
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