I need help mainly with subpart D, but if you could also provide an answer to the other subparts I would really appreciate it! 1. MedicLab has a drug patent on an effective migraine headache medicine. MedicLab is currently earningan economic profit.(a) Draw a correctly labeled graph for MedicLab. In your graph, identify the following.а.MedicLab's profit-maximizing price and quantity, labeled and.b. MedicLab's area of economic profit (area should be shaded in).(b) The government is considering new anti-trust legislation and may regulate MedicLab's migrainemedicine even though its patent is still valid. Show, on a graph, what price the government mayrequire MedicLab to sell its migraine medication for if it wants MedicLab to produce at the following.а.The socially optimal level of output, labeled as or.b. The fair-return price, labeled as.(c) If the government decides to regulate MedicLab as in part (b) above, how will this affect the welfare ofthe consumers who purchase this migraine medication? Use a new graph tosurplus for consumers in this market before and after regulation. Specifically, show on your graph andexplain the differences in consumer surplus in each of the following situations.entify the consumerа.Consumer surplus without government regulation.b.Consumer surplus with regulation at the socially optimal output level.С.Consumer surplus with regulation at the fair-return price.(d) Assume that the government decides against regulating MedicLab's migraine medicine, but that thepatent for the drug expires. Explain what happens to the following.MedicLab's profit-maximizing price and quantity.a.b. MedicLab's profit.

Patent refers to the exclusive right given to a firm to produce a particular good or service in the…

(d) Assume that the government decides against regulating MedicLab's migraine medicine, but that the patent for the drug expires. Explain what happens to the following. a. MedicLab's profit-maximizing price and quantity. b. MedicLab's profit.

(d) Assume that the government decides against regulating MedicLab's migraine medicine, but that the patent for the drug expires. Explain what happens to the following. a. MedicLab's profit-maximizing price and quantity. b. MedicLab's profit.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

I need help mainly with subpart D, but if you could also provide an answer to the other subparts I would really appreciate it!

1. MedicLab has a drug patent on an effective migraine headache medicine. MedicLab is currently earning
an economic profit.
(a) Draw a correctly labeled graph for MedicLab. In your graph, identify the following.
а.
MedicLab's profit-maximizing price and quantity, labeled and.
b. MedicLab's area of economic profit (area should be shaded in).
(b) The government is considering new anti-trust legislation and may regulate MedicLab's migraine
medicine even though its patent is still valid. Show, on a graph, what price the government may
require MedicLab to sell its migraine medication for if it wants MedicLab to produce at the following.
а.
The socially optimal level of output, labeled as or.
b. The fair-return price, labeled as.
(c) If the government decides to regulate MedicLab as in part (b) above, how will this affect the welfare of
the consumers who purchase this migraine medication? Use a new graph to
surplus for consumers in this market before and after regulation. Specifically, show on your graph and
explain the differences in consumer surplus in each of the following situations.
entify the consumer
а.
Consumer surplus without government regulation.
b.
Consumer surplus with regulation at the socially optimal output level.
С.
Consumer surplus with regulation at the fair-return price.
(d) Assume that the government decides against regulating MedicLab's migraine medicine, but that the
patent for the drug expires. Explain what happens to the following.
MedicLab's profit-maximizing price and quantity.
a.
b. MedicLab's profit.

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