Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Apotheosis is a small pharmaceutical company that has just developed and patented the first drug to treat the genetic cause of a rare disorder and

Apotheosis is a small pharmaceutical company that has just developed and patented the first drug to treat the genetic cause of a rare disorder and not simply its symptoms. You are managing the department in charge of setting the price and quantity for the company's drug. Your analysts have estimated that the market demand for this drug in the company's country, a, is given by: () = 1,050 4, where is the quantity of annual prescriptions and is the price for a yearly prescription of the drug. Your research department has run a statistical cost analysis which estimates that the cost of producing this drug is () = 70,125 + 0.01252. This implies a marginal cost of production of () = 0.025. a) Find the profit-maximizing price and quantity, and compute the firm's profit in this case. Should Apotheosis shut down in the short run? Justify your

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Research Design Qualitative Quantitative And Mixed Methods Approaches

Authors: John W. Creswell, J. David Creswell

5th Edition

1506386709, 9781506386706

More Books

Students also viewed these Economics questions

Question

Values: What is important to me?

Answered: 1 week ago