CENGAGE | MIND News Analysis: Market Power and the Epipen 2. The market for EpiPens Consider the pharmaceutical company Mylan that produces epinephrine injection devices called EpiPens. In the presence of other firms producing substitutes for this good, the price of EpiPens is $150. Now suppose that competitors to Mylan no longer produce epinephrine injection devices, so Mylan now has pricing power in this market. As the economist on staff at Mylan, you are charged with the task of figuring out what your company's new pricing strategy should be. The following graph shows the marginal cost (MC), which is assumed to be constant, and the average total cost (ATC) of Mylan. The graph also shows the demand curve (D) for EpiPens and the marginal revenue curve (MR) once the firm has market power. On the graph, use the grey point (star symbol) to indicate the quantity of EpiPens demanded if Mylan continues to charge $150. Dashed drop lines will automatically extend to both axes. 1000 900 800 On at $150 700 600 Profit Max PRICE (Dollars per Epipen) ATC at Profit Max 200 Profit 100 MR 4 5 6 QUANTITY (Thousands of EpiPens) If Mylan continues to charge $150 per Epipen, Mylan will earn economic profit. True or False: Given the demand curve for EpiPens, you should tell Mylan's CEO that total revenue will decrease if she raises the price of EpiPens because the demand curve in this region is relatively inelastic. O True False On the previous graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity. Dashed drop lines will automatically extend to both axes. pe here to search O