Prime Pharmaceuticals has developed a new asthma medicine, for which is has a patent. An inhaler can be produced at a constant marginal cost of $2/inhaler
The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are in the figure above. With its patent giving it a monopoly for its new inhaler, if Prime Pharmaceuticals operates as a single-price monopoly, then consumer surplus is ________ and producer surplus is ________. A) zero; $64 million
B) $32 million; $32 million
C) $16 million; $32 million
D) $16 million; $48 million.
C
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In the presence of a negative externality in production, a monopoly will produce
A) more than the social optimum. B) less than the social optimum. C) the social optimum. D) All of the above are possible.
You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your demand for
a. sweatpants will increase. b. sweatpants will decrease. c. shorts will increase. d. shorts will decrease.