You work as a marketing analyst for a pharmaceutical firm, and you are trying to gather information about the marginal cost of production for a competing firm
You know that they have a patent on a popular medication that sells for $20 per dose, and you believe the elasticity of demand for this product is roughly -4. Assuming the competing firm acts as a profit-maximizing monopolist, what is the competing firm's approximate marginal cost of production? A) $10 per dose
B) $12.50 per dose
C) $15 per dose
D) $20 per dose
C
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Suppose that Far North Canadian Lumber, Ltd., sells lumber in Canada at a price of $1,000 per 1,000 board feet and exports the same lumber to the United States at a price of $600 per 1,000 board feet. U.S. Lumber, Inc., produces and sells lumber for $700 per 1,000 board feet in the United States. Is Far North Canadian Lumber dumping lumber in the United States?
a. Yes; its price in Canada is greater than its price in the United States. b. Yes; its price in Canada is greater than U.S. Lumber's price. c. No; its price in the United States is less than U.S. Lumber's price. d. No; it is maximizing its profits when it price discriminates between the United States and Canada.
In which of the following market structures with 2 identical firms do both firms produce more than the Cournot outcome?
A) Stackelberg Oligopoly B) Cartel C) Perfect Competition D) None of the above.