Exhibit 12.4 The Market Demand Curve for Claritin Price $8 With patent protection from the government, the demand curve that Schering-Plough faces for its sales of Claritin is the entire market. For example, if Schering-Plough chose a price of $4, then it would be able to sell 400 million units, but the demand curve shows that if it chose a price of $6 or higher, it wouldn't sell any Claritin, despite having a monopoly. 6. 4 3 DClaritin 1 Let's assume/estimate: What would the market 100 200 300 400 500 600 700 800 price and the quantity be under perfect competition? And what for the Demand: p=7-x/150 Quantity (in millions of pills) Cost = 1*x Marginal Cost c'=1 monopoly? 7.

Exhibit 12.4 The Market Demand Curve for Claritin Price $8 With patent protection from the government, the demand curve that Schering-Plough faces for its sales of Claritin is the entire market. For example, if Schering-Plough chose a price of $4, then it would be able to sell 400 million units, but the demand curve shows that if it chose a price of $6 or higher, it wouldn't sell any Claritin, despite having a monopoly. 6. 4 3 DClaritin 1 Let's assume/estimate: What would the market 100 200 300 400 500 600 700 800 price and the quantity be under perfect competition? And what for the Demand: p=7-x/150 Quantity (in millions of pills) Cost = 1*x Marginal Cost c'=1 monopoly? 7.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter9: Monopoly

Section: Chapter Questions

Problem 7SQP

See similar textbooks

Similar questions

What is the usual shape of a marginal revenue cuwe for a monopolist? Why?
How does the demand curve perceived by a monopolist compare with the market demand curve?
Why would a firm choose to use one or more of the anticompetitive practices described in Regulating Anticompetitive Behavior?
Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?
Draw the demand curve, marginal revenue, and marginal cost curves from Figure 9.6, and identify the quantity of output the monopoly wishes to supply and the price it will charge. Suppose demand for the monopolys product increases dramatically. Draw the new demand me. What happens to the marginal revenue as a result of the increase in demand? What happens to the marginal cost curve? Identify the new profit-maximizing quantity and price. Does the answer make sense to you? Figure 9.6 Illustrating Profits at the HealthPill Monolpoly
If public utilities are a natural monopoly, what would be the danger in deregulating them?
What are some of the benefits of the deregulation?
In what sense is a natural monopoly natural?
Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
If a monopoly firm is earning profits, how much would you expect these profits to be diminished by entry in the long run?
ALCOA does not have the monopoly power it once had. How do you suppose their barriers to entry were weakened?
If the transit system were allowed to operate as an unregulated monopoly, what output would it supply and what price would it charge?