Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 16, Problem 10IP
To determine
Strategy for round up in the short run and long run.
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1. A U.S. patent for the drug that most effectively treats HIV prevents other drug companies from producing a comparable substitute for patients.
a. What is the effect of patent protection on the demand for a drug? How does the shape of the demand curve differ before and after a patent has expired? Support your explanation with a graph.
b.Demand curves respond to preferences, income, and costs of substitute and complements. Discuss how these factors determine a country’s demand for HIV treatments. How might the effects of the patent protection differ across countries?
couldn't legalizing marijuana generate significant revenue? to the US economy
Give typing answer with explanation and conclusion
A monopolist has a demand curve given by P = 88 − Q and a total cost curve given by TC = 34 + Q2. The associated marginal cost curve is MC = 2Q. Suppose the monopolist also has access to a foreign market in which he can sell whatever quantity he chooses at a constant price of 60. How much will he sell in the foreign market? What will his new quantity and price be in the original market?
Chapter 16 Solutions
Microeconomics
Ch. 16.1 - Prob. 1QCh. 16.1 - Prob. 2QCh. 16.1 - Prob. 3QCh. 16.1 - Prob. 4QCh. 16.1 - Prob. 5QCh. 16.1 - Prob. 6QCh. 16.1 - Prob. 7QCh. 16.1 - Prob. 8QCh. 16.1 - Prob. 9QCh. 16.1 - Prob. 10Q
Ch. 16 - Prob. 1QECh. 16 - Prob. 2QECh. 16 - Prob. 3QECh. 16 - Prob. 4QECh. 16 - Prob. 5QECh. 16 - Prob. 6QECh. 16 - Prob. 7QECh. 16 - Prob. 8QECh. 16 - Prob. 9QECh. 16 - Prob. 10QECh. 16 - Prob. 11QECh. 16 - Prob. 12QECh. 16 - Prob. 1QAPCh. 16 - Prob. 2QAPCh. 16 - Prob. 3QAPCh. 16 - Prob. 4QAPCh. 16 - Prob. 5QAPCh. 16 - Prob. 6QAPCh. 16 - Prob. 1IPCh. 16 - Prob. 2IPCh. 16 - Prob. 3IPCh. 16 - Prob. 4IPCh. 16 - Prob. 5IPCh. 16 - Prob. 6IPCh. 16 - Prob. 7IPCh. 16 - Prob. 8IPCh. 16 - Prob. 9IPCh. 16 - Prob. 10IPCh. 16 - Prob. 11IP
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- In this question, you will discuss the general case of positive externalities in a monopolist’s presence. what is the impact of a monopolist’s presence on a market without positive externalities? Does monopolist hurt the overall social gain (i.e., total surplus or total welfare)? Please explain. Could a monopolist improve the competitive market outcome for a good or a service with positive externalities (and no government intervention to correct it)? Why or why not? Please explain.arrow_forwardHow does monopoly effect the pharmaceutical industry?arrow_forwardHow much is total surplus if the market is perfectly competitive?How much is total surplus if the market is controlled by a single price monopolist?Suppose the single price monopolist started charging all customers the maximum price they are willing to pay. How much additional surplus is created?arrow_forward
- Suppose that a monopolist’s demand curve is P = 9 – 2*Q. Marginal cost is expressed as follows: MC = 0.5*Q. What is the profit-maximizing price (P) the monopoly should set? What would be the output (Q) at that price? What are the current values for the consumer and producer surpluses (CS and PS)? Is it possible to calculate the profit made by the monopolist? If so, how much is it? If not, what other information would be needed to do that? What would be the 2 key options for a government regulator to increase the consumer surplus (CS) and reduce the producer surplus (PS)? Explain briefly the pros and cons of one of the options!arrow_forwardAssume that consumers value a high quality piece of furniture at 5000 and a bad quality one at 3000. Assume that producing a bad quality piece of furniture costs the manufacturer 3500 and producing a high quality one costs 5000. . A) If the manufacturer is a monopolist, what will be the equilibrium sales prices on this market? B) How would your answer change, if the cost of producing a low quality piece of furniture went to 2900?arrow_forwardHi! I got stuck with my microeconomics homework. Can you please help? Here's the problem: A monopolist knows that in order to expand the quantity of output it produces from 8 to 9 units it must lower the price of its output from $2 to $1. Calculate the quantity effect and the price effect. Use these results to calculate the monopolist’s marginal revenue of producing the 9th unit. The marginal cost of producing the 9th unit is positive. Is it a good idea for the monopolist to produce the 9th unit? It is from Microeconomics: Canadian Edition by Paul Krugman; Robin Wells; Iris Au; Jack Parkinsonarrow_forward
- Does a monopolist take market price as given? Why or why not? No, because barriers to entry exist, a monopolist does not take the market price as given. No, a monopolist takes into account that its output decision can affect price, and its marginal revenue is not its price. Yes, a monopolist takes the market price as given because the monopolist faces potential competition from other firms, so the price charged must be competitive. Yes, a monopolist’s marginal revenue is the given market price.arrow_forwardOnly one firm produces and sells soccer balls in the country of Wiknam, and as the story begins, international trade in soccer balls is prohibited. The following equations describe the monopolist's demand, marginal revenue, total cost, and marginal cost: Demand: P=15-Q Marginal Revenue: MR = 15-20 Total Cost: Marginal Cost: TC=3+Q+0.50² MC = 3+Q where Q is quantity and P is the price measured in Wiknamian dollars. The monopolist produces soccer balls and sells them at a price of s each. The monopolist's profit is s The domestic production of soccer balls will to Wiknam will soccer balls in this case. One day, the King of Wiknam decrees that henceforth there will be free trade-either imports or exports-of soccer balls at the world price of $10. The firm is now a price taker in a competitive market. soccer balls, and domestic consumption will to in this case. In the analysis of international trade in Chapter 9, a country becomes an exporter when the price without trade is below the world…arrow_forwardOnly one firm produces and sells soccer balls in the country of Wiknam, and as the story begins, international trade in soccer balls is prohibited. The following equations describe the monopolist's demand, marginal revenue, total cost, and marginal cost: Demand: P = 10 - Q Marginal Revenue:MR = 10 - 2 Q Total Cost TC= 3 + Q+0.5 Q2 Marginal Cost: MC= 1+ Q, where Q is quantity and Pis the price measured in Wiknamian dollars. a. How many soccer balls does the monopolist produce? At what price are they sold? What is the monopolist's profit? b. One day, the King of Wiknam decrees that henceforth there will be free trade-either imports or exports of soccer balls at the world price of $6.The firm is now a price taker in a competitive market What happens to the domestic production of soccer balls? To domestic consumption? Does Wiknam export or import soccer balls? c. In our analysis of international trade in Chapter a country becomes an exporter when the price without trade is below the…arrow_forward
- The following graph shows the demand, marginal revenue, and marginal cost curves for a single-price monopolist that produces a drug that helps relieve arthritis pain. Place the grey point (star symbol) in the appropriate location on the graph to indicate the monopoly outcome such that the dashed lines reveal the profit-maximizing price and quantity of a single-price monopolist. Then, use the green rectangle (triangle symbols) to show the profits earned by the monopolist. PRICE (Dollars per dose) 0 19 1 MC ATC MR 2 3 7 5 4 5 6 QUANTITY (Millions of doses per year) Demand 9 10 [x| Monopoly Outcome Monopoly Profits Suppose that should the patent on this particular drug expire, the market would become perfectly competitive, with new firms immediately entering the market with essentially identical products. Further suppose that in this case the original firm will hire lobbyists and make donations to several key politicians to extend its patent for one more year. The firm is prepared to…arrow_forwardA pharmaceutical company Eureka Bio has discovered a Corona vaccine that can be produced at constant marginal cost of R10. The company has entered into offtake dosage agreements with country A and B. Country A has a dosage demand of QA = 200 - PA and Country B has dosage demand QB = 160 -PB a. If WHO introduces a regulation on the price of dosages, calculate the price, profits and dosages that Eureka can charge.arrow_forwardSuppose a firm has acquired a monopoly on water distribution in a certain county in Florida. The following table represents the demand and costs this monopolist faces. Fill in the missing values in the table. The goal of the monopolist is to maximize its profit. What price per gallon of water should it charge and how many gallons per month should it sell? How much profit does it make? Suppose that the government imposes a tax of $1 million per month on water production. What price should this water distributor charge? How many gallons per month should it sell? How much profit would it make?arrow_forward
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