A 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 of QB=160-PB (a) Suppose that Country A has high infection rates, determine the price that Eureka Bio can charge Country A and B to prevent a resale between countries. (b) If Eureka Bio is the only pharmaceutical company that was successful in developing vaccines, determine the dosage that will be sold to both Countries. What will be Eureka’s profit? (c) If World Health Organization introduces a regulation on the price of dosages, calculate the price, profits and dosages that Eureka can charge.

A 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 of QB=160-PB (a) Suppose that Country A has high infection rates, determine the price that Eureka Bio can charge Country A and B to prevent a resale between countries. (b) If Eureka Bio is the only pharmaceutical company that was successful in developing vaccines, determine the dosage that will be sold to both Countries. What will be Eureka’s profit? (c) If World Health Organization introduces a regulation on the price of dosages, calculate the price, profits and dosages that Eureka can charge.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter12: More Realistic And Complex Pricing

Section: Chapter Questions

Problem 3MC

See similar textbooks

Similar questions

A 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 of QB=160-PB(a) Suppose that Country A has high infection rates, determine the price that Eureka Bio can charge Country A and B to prevent a resale between countries.(b) If Eureka Bio is the only pharmaceutical company that was successful in developing vaccines, determine the dosage that will be sold to both Countries. What will be Eureka’s profit? (c) If World Health Organization introduces a regulation on the price of dosages, calculate the price, profits and dosages that Eureka can charge. please answer a and c
A pharmaceutical company Eureka Bio has discovered a Corona vaccine that can be produced at a constant margin cost of $10. The company has entered into off take dosage agreement with Country A and B. Country A has a dosage demand of QA = 200 - PA and Country B has a dosage demand QB = 150 - PB. (a) Suppose that Country A has higher infection rates, determine the price that Eureka Bio can charge Country A and B to prevent a resale between countries. (b) If Eureka Bio is the only pharmaceutical company that was successful in developing vaccine, determine the dosage that will be sold to both countries. What will be the Eureka's profit ? (c) If World Health Organization introduces a regulation on the price of dosage, calculate the price, profits and dosage that Eureka can charge.
A pharmaceutical company Eureka Bio has discovered a corona vaccine that can be produced at constant marginal cost of R10. The company has entered into dosage demand of QA=200-PA, and country B has dosage demand QB = 160-PB. a. Suppose that country A has high infection rates, determine the price that Eureka Bio can charge country A and B to prevent a resale between countries. b. If Eureka Bio is the only pharmaceutical company that was successful in developing vaccines, determine the dosage that will be sold to both countries. What will be Eureka's profit?
A dominant or price setting firm and several smaller price takers serve a market where total market demand is Qd = 560 – 2P and the combined supply from all the smaller firms is Qs = - 60 + 2P. Does this market meet the assumptions that the dominant firm has at least a market share of 50%? (you must motivate your answer numerically)
A local defense contractor is considering the production of fireworks as a way to reduce dependence on the Military. The variable cost per unit is $ 40D. The fixed cost that can be allocated to the production of fireworks is negligible. The price charge per unit will be determined by the equation p= 180-5(D), where D represent demand in unit 1) What is the optimal number of units the defense contractor should produce in order to maximize profit per week? 2) What is the profit if the optimal number of unit produced?
Is the following statement true or false: “Customers prefer product A more than product B if the customer value of product A is less than the customer value of product B." Group of answer choices False True
After reviewing Institute for Clinical and Economic Review consider the following: In the UK, very few drugs or procedures are approved if they cost more than $50,000 per QALY. Take the example of PCSK9 inhibitors. The PCSK9 inhibitors(PSK9i) are a class of injectable drugs approved in 2015 that have been shown to dramatically lower LDL cholesterol levels, by up to 60% when combined with a statin. The market price of the first PCSK9s to be sold in the US in 2015 was $14,350 per year. The ICER analysis shows how many more patients could be treated at a lower total budget impact if the price could be lowered. Given this information what price should Medicare pay for a PSCK9? Should a state Medicaid program pay more or less? Should Medicaid programs in low-income states pay more, less, or the same, compared to high-income states? Should there be one $/QALY for an entire country? How would you expect drug companies to react to price limits set by public programs?
A reserve price is a minimum price set by the auctioneer. If no bidder is willing to pay the reserve price, the item is unsold at a profit of $0 for the auctioneer. If only one bidder values the item at or above the reserve price, that bidder pays the reserve price. An auctioneer faces two bidders, each with a value of either $228 or $304, with both values equally probable. Without a reserve price, the second highest bid will be the price paid by the winning bidder. The following table lists the four possible combinations for bidder values. Each combination is equally likely to occur. On the following table, indicate the price paid by the winning bidder with and without the stated reserve price. Bidder 1 Value Bidder 2 Value Probability Price Without Reserve Price with $304 Reserve Price ($) ($) ($) $228 $228 0.25 $228 $304 0.25 $304 $228 0.25 $304 $304 0.25 Without a reserve price, the expected…
LalaFast 21 is a major carrier based in the Philippines and has made a strategy of cutting fares drastically on certain routes with large effects on traffic in those markets. For example, on the Baguio-Cubao route the entry of LalaFast into the market caused average fares to fall by 48 per cent and increased market revenue from P21,327,008 to P47,064,782 annually. On the Tuguegarao-Caloocan route, however, the average fare cut in the market when LalaFaST entered was 70 per cent and market revenue fell from an annual P66,201,553 to P33,101,514.Questions1. Calculate the PEDs for the Baguio-Cubao route and Tuguegarao-Caloocan route.2. Explain why the above market elasticities might not apply specifically to Lalafast 21.3. If LalaFast 21 does experience a highly elastic demand on the Baguio-Cubao route, what is the profit implication of this?4. Explain why the fare reduction on the Tuguegarao-Caloocan route a profitable strategy for LalaFast may still be.
Consider a two-stage context where the incumbent invests in capacity of K1 in stage one. For a demand function of Q = 50 – 0.5P, where Q is the market quantity, P is price, and there is one incumbent and one potential entrant in the market, show how to find the incumbent’s best response function in stage two. Per-unit labour and capital costs equal 20 and fixed costs equal 100 for both firms.
Consider a population of consumers. When a consumer is a member of a club providing a level of provision G and having n members, they obtain utility Where k is a positive constant and G n is the charge for club membership. a. Derive the optimal membership for the club if it maximizes the utility of each member. b. Assuming the club chooses G optimally given its member ship; calculate the loss due to membership of a club with suboptimal size. c. Assume that the total population is of size m, with k d. What club size maximizes total utility produced by the club? Contrast to the answer for part a.
A company is considering outsourcing its customer service work. The following are bids received from two different companies. Vendor Price A $10,000 + 120X B $100,000 + 30X X- Number of calls received per year. The number of calls per year that the company has to service so that both the offers from vendors A and B are equally attractive is the following. Group of answer choices 1500 1000 1600 900 1200