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Murkk Pharmaceuticals has developed a drug that can cure baldness. Because of the patent it holds, it has a monopoly in the production of this
Murkk Pharmaceuticals has developed a drug that can cure baldness. Because of the patent it holds, it has a monopoly in the production of this drug. It later discovers that the drug can also cure wrinkles. Because of this, Murkk has a choice. It can sell the product to both consumer for the same price, or it can charge a different price to each group of consumers (assume Murkk can keep the two markets separated). On the left graph, you can see the bald consumers' demand curve (labeled DB) and marginal revenue curve (labeled MRg), and the wrinkled consumers' demand curve (labeled Dy) and marginal revenue curve (labeled MRw). You can also see the marginal cost curve labeled MC (Murkk's marginal cost is $15 per unit). The graph on the right shows the total demand (D,) for Murkk's drug and the total marginal revenue curve (MR.), as well as the marginal cost (MC, which remains a constant $15 per unit). Murkk's fixed costs are $400,000. Price Price 50 50 45 45 40 35 35 30 30 25 MRa 25 20 20 15 MC 15 MC 10 10 DW 5 MRr MRTY 5 10 15 20 25 30 35 40 45 50 10 20 30 40 50 60 70 80 90If Murkk practices price discrimination, it will charge bald customers a price of $ and sell them thousand units. If Murrk practices price discrimination, it will charge wrinkled customers a price of $ and sell to them I thousand units. Under this pricing scheme, Murkk's profits will be equal to $
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