Pharmtastic is a drug manufacturer that recently gained FDA approval to sell its new product Flowkurr, a drug which improves blood flow in patients with poor blood circulation. Assume Pharmtastics patent on Flowkurr has 10 years remaining, giving Pharmtastic exclusive sales rights for the next decade.

a) Suppose that several inexpensive drugs of similar nature and efficacy to Flowkurr are already widely available in the US. In this setting, will Pharmtastic likely be able to exert a high degree of market power in the market for Flowkurr? Why or why not?

b) Now suppose that Pharmtastic purchases the rights to produce all of the drugs competing with Flowkurr, and halts the production of these competitors. In this setting, will Pharmtastic likely be able to exert a high degree of market power in the market for Flowkurr? Why or why not?

Draw one graph with two demand curves one illustrating the demand for Flowkurr under scenario a), and one illustrating the demand for scenario b) along with a single supply curve. Label all necessary curves, both axes, and the equilibrium price and quantity of Flowkurr under each scenario.