Question
Please help me through these mcqs- 1.A drug company produces a new drug to treat baldness. The inverse demand curve for the drug is P
Please help me through these mcqs-
1.A drug company produces a new drug to treat baldness. The inverse demand curve for the drug is P = 205 - 20Q, where Q measures the number of pills in millions. The various costs of production are given by TC = 100 + 5Q, ATC = 5 + 100/Q, and MC = 5. If the government grants this firm a patent, it will earn profits of _____. If the government revokes the patent, and the firm must sell its drug at marginal cost because of competition, it will earn profits or losses of _____.
$600 million; $500,000
$400 million; -$100 million
$70 million; -$25 million
$2 billion; $0
2.(Figure: Natural Monopolist I) If the government regulates the price of this natural monopolist to achieve a perfectly competitive output level, consumer surplus will change from _____ to _____.
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