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Question B.2 Suppose a company has invented and patented a new effective drug to treat hay fever. The marginal cost of producing the drug is:

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Question B.2 Suppose a company has invented and patented a new effective drug to treat hay fever. The marginal cost of producing the drug is: MC = $7, and for simplicity, assume there is no fixed cost. Without being covered in any insurance plan, the market demand is as follows: Qa = 1000 - 20P (a) What price should the company charge and what is the equilibrium quantity? (2 marks)

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