Cornell Pharmaceutical, Inc., and Penn Medical, Ltd., supply generic drugs to treat a wide variety of illnesses. A major product for each company is a generic equivalent of an antibiotic used to treat postoperative infections. Proprietary cost and output information for each company reveal the following relations between price (marginal cost) and output: P = $10 + $0.004Qc (Cornell) P = $8 + $0.008 Qp (Penn) 1. Assuming these two firms make up the entire industry, determine the industry supply curve when P < $10. 2. Determine the industry supply curve when P > $10.
Cornell Pharmaceutical, Inc., and Penn Medical, Ltd., supply generic drugs to treat a wide variety of illnesses. A major product for each company is a generic equivalent of an antibiotic used to treat postoperative infections. Proprietary cost and output information for each company reveal the following relations between price (marginal cost) and output: P = $10 + $0.004Qc (Cornell) P = $8 + $0.008 Qp (Penn) 1. Assuming these two firms make up the entire industry, determine the industry supply curve when P < $10. 2. Determine the industry supply curve when P > $10.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Cornell Pharmaceutical, Inc., and Penn Medical, Ltd., supply generic drugs to treat a wide variety of illnesses. A major product for each company is a generic equivalent of an antibiotic used to treat postoperative infections. Proprietary cost and output information for each company reveal the following relations between price (marginal cost) and output:
P = $10 + $0.004Qc (Cornell)
P = $8 + $0.008 Qp (Penn)
1. Assuming these two firms make up the entire industry, determine the industry supply curve when P < $10.
2. Determine the industry supply curve when P > $10.
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