COVID-19Vaccines

Balancing the concerns of patients and pharmaceutical firms is a difficult task forpolicymakers even in the best of times; COVID-19 has intensified these issues.Thisquestion asks you to analyze the market for COVID-19 vaccines to understand howdifferentpolicy approaches mayaffect outcomes.

1.[6points]SupposethatglobaldemandfortheCOVID-19vaccineisgivenby:

Q = 36- 6 * P

whereQisthedemandinbillionsof doses.SupposefurtherthatthefirmDomernaholds a patent on the only effective vaccine.Domerna's total cost function (inbillionsof dollars) for producing Q vaccinedosesis:

C = 5 + 3* Q

AssumingthatthepatentgrantsDomernaamonopolyontheglobalvaccinemarket:

a.[4points]HowmanyvaccinedoseswillDomernachoosetoproduce?

b.[1points]AtwhatpricewillDomernasellitsvaccines?

c.[1points]WhatprofitwillDomernamake?