[Let’s think about awarding a patent to any medication drug using the concepts that we learned in this course. Let’s say the drug is an allergy medicine called “Allergy Gone”- (made up name, not a real medicine). The marginal cost of producing daily dose of this medicine is $5. The annual demand and marginal revenue curve facing “Allergy Gone” are shown below: [ using the graph and information supplied above, answer the questions below. Note- MR, MC and D refer to Marginal revenue, marginal cost, and demand curve in the figure above] [ Let’s say “Allergy Gone” is the first effective allergy drug and has awarded a patent. Therefore, “Allergy Gone” has a monopoly in the allergy drug market. Using the graph above, find out the monopoly price and quantity in this market and explain in 1-2 sentences. 2. [Calculate the consumer surplus, producer surplus and deadweight loss as “Allergy Gone” becomes a monopoly in the allergy drug market. 3. [ Now, let’s assume “Allergy Gone” enters a competitive market (after the expiry of patent period) where there are numerous other firms also selling similar allergy medication. Using the graph above, find out the equilibrium price and quantity in the competitive market and explain in 1-2 sentences (Hint: In a competitive market, equilibrium is determined where D(AR) curve intersect with the supply curve). Calculate consumer surplus and producer surplus in this market.
[Let’s think about awarding a patent to any medication drug using the concepts that we learned in this course. Let’s say the drug is an allergy medicine called “Allergy Gone”- (made up name, not a real medicine). The marginal cost of producing daily dose of this medicine is $5. The annual demand and marginal revenue curve facing “Allergy Gone” are shown below:
[ using the graph and information supplied above, answer the questions below. Note- MR, MC and D refer to Marginal revenue, marginal cost, and demand curve in the figure above]
- [ Let’s say “Allergy Gone” is the first effective allergy drug and has awarded a patent. Therefore, “Allergy Gone” has a
monopoly in the allergy drug market. Using the graph above, find out the monopolyprice and quantity in this market and explain in 1-2 sentences.
2. [Calculate the
3. [ Now, let’s assume “Allergy Gone” enters a competitive market (after the expiry of patent period) where there are numerous other firms also selling similar allergy medication. Using the graph above, find out the
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by Bartleby ExpertNow, let’s assume “Allergy Gone” enters a competitive market (after the expiry of patent period) where there are numerous other firms also selling similar allergy medication. Using the graph above, find out the
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