MonoMed, having a Patent on production of a medicine, has following Demand and CostSchedule: Price (Rs ): 12 11 10 9 8 7 6 5 4 3 Quantity 0 1 2 3 4 5 6 7 8 9 TVC ( Rs ) 0 13 16 20 25 31 38 46 56 68 Where Fixed Cost is Rs 5 In a Table calculate TR, MR, TC, AVC, ATC and MC at each price. Plot the Demand, Marginal Revenue MR, Average Total Cost ATC, Average Variable Cost AVC and Marginal Cost MC Curves of the Firm in a clearly labelled graph. Calculate the profit earned, if any and show the area on the firm’s graph. How would you define the market structure of MonoMed? What are the characteristics? Does the firm have pricing power? E) What will be the impact of the firm on societal welfare? Would there be welfare loss as compared to a competitive firm? If so, briefly explain. Support your answer using MonoMed’s graph in (b) above.
MonoMed, having a Patent on production of a medicine, has following Demand and CostSchedule:
Price (Rs ): 12 11 10 9 8 7 6 5 4 3
Quantity 0 1 2 3 4 5 6 7 8 9
TVC ( Rs ) 0 13 16 20 25 31 38 46 56 68
Where Fixed Cost is Rs 5
- In a Table calculate TR, MR, TC, AVC, ATC and MC at each price.
- Plot the Demand, Marginal Revenue MR,
Average Total Cost ATC,Average Variable
Cost AVC and Marginal Cost MC
- Calculate the profit earned, if any and show the area on the firm’s graph.
- How would you define the market structure of MonoMed? What are the characteristics?
Does the firm have pricing power? E) What will be the impact of the firm on societal welfare? Would there be welfare loss as compared to a competitive firm? If so, briefly explain. Support your answer using MonoMed’s
graph in (b) above.
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