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Suppose that you are hired as a consultant to a firm producing a therapeutic drug protected by a patent that

gives a firm a monopoly in two markets. The drug can be transported between the two markets at no cost. The demand schedule in the first market is Q1=100-0.5P1, where P1 is the price of the product and Q1 is the amount sold in the market. In the seconds market, the demand is Q2=140- P2, where P2 is the price of the product and Q2 is the amount sold in the market. The firm’s overall marginal cost is MC=20+ Q1+ Q2. What price(s) should the firm charge in these markets? What will be the firm’s profit?

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uppose that you are hired as a consultant to a firm producing a therapeutic drug protected
by a patent that gives a firm a monopoly in two markets. The drug can be transported
between the two...

Sign up to view the full answer

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