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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![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
O False
On the previous graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity. Dashed drop lines will automatically
extend to both axes.
On the previous graph, 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faa00ebaa-23b9-4b28-a7ce-1aeaaf3b9d34%2F6c5a546c-c7a8-4ed9-8a35-754fad13ae7b%2F96g8cv_processed.png&w=3840&q=75)
Transcribed Image Text: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
O False
On the previous graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity. Dashed drop lines will automatically
extend to both axes.
On the previous graph, 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.
![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.
1000
900
800
Qp at $150
700
600
Profit Max
500
400
ATC at Profit Max
300
ATC
200
Profit
MC
100
MR
2
3 4
5
10
QUANTITY (Thousands of EpiPens)
PRICE (Dollars per EpiPen)
D.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faa00ebaa-23b9-4b28-a7ce-1aeaaf3b9d34%2F6c5a546c-c7a8-4ed9-8a35-754fad13ae7b%2F7otmth_processed.png&w=3840&q=75)
Transcribed Image Text: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.
1000
900
800
Qp at $150
700
600
Profit Max
500
400
ATC at Profit Max
300
ATC
200
Profit
MC
100
MR
2
3 4
5
10
QUANTITY (Thousands of EpiPens)
PRICE (Dollars per EpiPen)
D.
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