Suppose that the demand function of a pharmaceutical firm is p = 20 - 0.5x, where p is the price of a prescription drug and x is the number of prescription drugs demanded by patients. For simplicity, assume that the pharmaceutical firm can produce an extra pill at a constant cost, and hence the marginal cost function is MC = 4.

A. Compute the optimal price and quantity for the pharmaceutical firm if the firm receives patent protection from the government.

B. Assuming that generic competition will drive down the price to marginal cost, compute the quantity of this product demanded when the patent expires.

C. Based on your answer, calculate the welfare loss that the patent system imposes on this product.