If Mylan continues to charge $150 per EpiPen, Mylan will earn _______ economic 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.- True- False**Graph Instructions:**1. **Profit-Maximizing Point:** - Use the black point (plus symbol) to indicate the profit-maximizing price and quantity. - Dashed drop lines will automatically extend to both axes.2. **Average Total Cost:** - 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. **Transcription of Graph Analysis on Educational Website**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 EpiPens demanded if Mylan continues to charge $150. Dashed drop lines will automatically extend to both axes.***Graph Explanation:**The graph displays the relationship between price and quantity for EpiPens, with the following key elements:- **Axes:** - The vertical axis represents the price in dollars per EpiPen, ranging from 0 to 1000. - The horizontal axis represents the quantity in thousands of EpiPens, ranging from 0 to 10.- **Curves:** - **Demand Curve (D):** Downward-sloping blue line representing the quantity of EpiPens demanded at various price levels. - **Marginal Revenue Curve (MR):** Downward-sloping black line that falls below the demand curve, indicating marginal revenue at various quantities. - **Marginal Cost (MC):** Horizontal orange line depicting constant marginal cost. - **Average Total Cost (ATC):** U-shaped green curve showing average total cost per EpiPen.- **Points and Symbols:** - **Q\_D at $150 (Grey Star):** Marks the quantity demanded if the price is set at $150, with dashed lines showing corresponding quantity. - **Profit Max (Black Cross):** Denotes the profit-maximizing quantity and price where marginal revenue equals marginal cost. - **ATC at Profit Max (Purple Diamond):** Indicates average total cost at the profit-maximizing point. - **Profit (Green Arrows):** Illustrates areas of profit where

The difference between the accounting cost and the opportunity cost is termed as the economic…

Mylan continues to charge $150 per EpiPen, Mylan will earn economic profit. rue 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 ecause the demand curve in this region is relatively inelastic. True O False In the previous graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity. Dashed drop lines will automatically xtend to both axes.

Mylan continues to charge $150 per EpiPen, Mylan will earn economic profit. rue 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 ecause the demand curve in this region is relatively inelastic. True O False In the previous graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity. Dashed drop lines will automatically xtend to both axes.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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