Long run incentives to develop new drugs

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A pharmaceutical company has estimated the demand function for a drug for which it has a patent to be:

Q=75,000  -100P  + .5M

1) If M is 50,000 and MC= 50, what is the profit maximizing level of output and price in a Perfect competition?

2) In the short run, are consumers who take this drug better or worse off after the patent expires?

3) Would your answer to f) change if you take into account long run incentives to develop new drugs?

Reference no: EM131159952

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