BigPhama is a profit-maximizing pharmaceutical company. It invests heavily in R&D to find new effective pharmaceutical drugs, which BigPhama goes on to patent. BigPhama can expect to be a monopoly supplier of patented new drugs for the duration of the patent.

BigPhama's latest patented drug is ViraBloc an anti-viral drug that helps treat coronavirus patients. The marginal cost of production is 1. Demand for the new drug is Q = 13 - p

1. Find the price that BigPhama will set for ViraBloc, the quantity produced and the profit generated. Sketch the monopoly outcome of this market in a diagram.

2. A new coronavirus variant Theta appears. ViraBloc is found to be very effective in preventing serious illness against Theta. As a result, demand for ViraBloc becomes less price elastic. In particular, the price elasticity of demand becomes1213 . Explain how this affects the price of ViraBloc.

3. During the pandemic some have argued that new vaccines and treatments for coronavirus should not be patented, in order to maximize global distribution, especially to developing countries. Discuss the welfare effects of such a proposal.