After obtaining a patent for developing a new drug, a pharmaceutical company becomes a monopoly in...

 

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After obtaining a patent for developing a new drug, a pharmaceutical company becomes a monopoly in the market for the new drug. The following graph shows the demand and costs that the company faces. Price Pa | Pz Pz P MR MC A AC Demand 0 Q Q2 Q3 Q Quantity 7. Refer to Figure 8. If the company is currently producing quantity Q1, how and why should it change its production to maximize profits? A. It should not change its production because Q1 is the profit-maximizing quantity. B. It should increase production because MR > MC at Q1. c. It should increase production because MR < MC at Q1. D. It should decrease production to obtain a higher price and MR. After obtaining a patent for developing a new drug, a pharmaceutical company becomes a monopoly in the market for the new drug. The following graph shows the demand and costs that the company faces. Price Pa | Pz Pz P MR MC A AC Demand 0 Q Q2 Q3 Q Quantity 7. Refer to Figure 8. If the company is currently producing quantity Q1, how and why should it change its production to maximize profits? A. It should not change its production because Q1 is the profit-maximizing quantity. B. It should increase production because MR > MC at Q1. c. It should increase production because MR < MC at Q1. D. It should decrease production to obtain a higher price and MR.

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