What price and quantity will result once the patent expires

Reference no: EM13210353

Mirk Labs is a British pharmaceutical company that currently enjoys a patent monopoly in Europe, Canada, and the United States on Zatab (pronounced zay-tab), an allergy medication. The global demand for Zatab is: Qd=15.0-0.2P Where Qd is annual quantity demanded (in millions of units) of Zatab, and P is the wholesale price of Zatab per unit. A decade ago, Mirk Labs incurred $60 million in research and development costs for Zatab. Current production costs for Zatab are constant and equal to $5 per unit. a. What wholesale price will Mirk Labs set? How much Zatab will it produce and sell annually? How much annual profit does the firm make on Zatab? b. The patent on Zatab expires next month, and dozens of pharmaceutical firms are prepared to enter the market with identical generic versions of Zatab. What price and quantity will result once the patent expires and competition emerges in this market? How much consumer surplus annually will allergy sufferers who take Zatab gain?

Reference no: EM13210353

Questions Cloud

What are the long-run implications of fdi : the Cobb-Douglas production function given in equation 4-1 applies to a developing country. Instead of thinking of immigration from a developing to a developed country, suppose a developed country invests large amounts of capital (foreign direct i..

Explain what is the chief product of dehydration : cannot be dehydrated to an alkene without rearrangement. What is the chief product of dehydration?

Explain diphenylethyne can be prepared from meso : Diphenylethyne can be prepared from meso-1,2-dibromo-1,2-diphenylethane, by double E2 elimination via the corresponding alkene. a) Which alkene is initially formed?

Compute the seepage velocity : Compute the seepage velocity and estimate the hydraulic gradient in the aquifer if the porosity of the soil is 42%.

What price and quantity will result once the patent expires : Mirk Labs is a British pharmaceutical company that currently enjoys a patent monopoly in Europe, Canada, and the United States on Zatab (pronounced zay-tab), an allergy medication. The global demand for Zatab is: Qd=15.0-0.2P

What is the flow rate that can be delivered : A water line to a home is usually 3⁄4" copper tube. What is the flow rate that can be delivered and still maintain laminar flow in the tube?

Why the prediction are less than the observed result : why the prediction are less than the observed result of connection in tension experiment?

How much does she get to keep after paying off the loan : A year after buying her car, Anita has been offered a job in Europe. Her car loan is for $15,000 at a 9% nominal interest rate for 60 months. If she can sell the car for $12,000, how much does she get to keep after paying off the loan

Explain nitrogen and oxygen do not react appreciably : Nitrogen and oxygen do not react appreciably at room temperature, as illustrated by our atmosphere. But at high temperatures, the reaction below can proceed to a measurable extent.

User Account

All Pages