In 2021 one of the world's largest pharmaceutical companies has had sales of $81.8 billion and a pre-tax profit of $22.5 billion. Assume the cost function is approximately TC(q) = F + cq, and that half of the company's total costs are fixed costs like R&D, advertising, litigation (legal costs), and management salaries and bonuses. Which of the below is the closest to the best estimate of the deadweight loss using the Cowling and Mueller method? (use all available information when finding a good substitute for the marginal cost in your deadweight loss formula) 3$ billion $5 billion $11 billion $13 billion $17 billion $20 billion

In 2021 one of the world's largest pharmaceutical companies has had sales of $81.8 billion and a pre-tax profit of $22.5 billion. Assume the cost function is approximately TC(q) = F + cq, and that half of the company's total costs are fixed costs like R&D, advertising, litigation (legal costs), and management salaries and bonuses. Which of the below is the closest to the best estimate of the deadweight loss using the Cowling and Mueller method? (use all available information when finding a good substitute for the marginal cost in your deadweight loss formula) 3$ billion $5 billion $11 billion $13 billion $17 billion $20 billion

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter7: Economies Of Scale And Scope

Section: Chapter Questions

Problem 5MC

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