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Monopoly Your pharmaceutical company has developed a gene therapy that addresses a rare life threatening condition. The inverse demand function for...
Monopoly
Your pharmaceutical company has developed a gene therapy that addresses a rare life threatening condition. The inverse demand function for this therapy is given as: P=$2,000,000 - 10,000Qd is the annual quantity demanded. While development costs were substantial, your marginal costs are just $20,000 per treatment (one treatment needed).
1 If you set a single price to maximize profits, what quantity will you supply each year? ( the marginal revenue function as the same y axis intercept as the inverse dement function but twice the slope. Set MR = MC and solve for Q)
2What is the price for treatment? (plug your quantity from 1 into the inverse demand function.)
3 If the treatment was priced at the marginal cost to your company, how many treatments would be provided per year?
