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3. (20 points) Glaxo is considering investing in the development of a new drug. It is the only company with the capabilities required to develop
3. (20 points) Glaxo is considering investing in the development of a new drug. It is the only company with the capabilities required to develop the new drug. It knows that if it invests F, then it will successfully develop and patent the new drug. Once Glaxo has patented the new drug, it can produce the new drug at a constant marginal cost of 2. The demand for the drug is given by P(Q) = 10 Q, where P(Q) is the price of the drug as a anction of the quantity produced. Thus, Glaxo's marginal revenue function, once it has patented the new drug, is MR(Q) = 10 - 2Q. (a) If Glaxo develops the new drug, what will be Glaxo's prot-maximizing quantity? (b) For what values of F will Glaxo choose not to develop the new drug
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