Please, I need a correct answer and clear explanation of the question. open imag

Question

Please, I need a correct answer and clear explanation of the question. open image for a clear view. Thanks,

2017-12-03.png Photos Question 1 1 points Prime Pharmaceuticals has deve loped a new asthma inhaler, for which it has a patent. An inhaler can be produced at a constant marginal cost of $2 per inhaler. The demand curve, marginal revenue curve, and marginal cost curve forthis new asthma inhaler are shown in Figure 13.4.6. The patent gives Prime Pharmace uti cals a monopoly for its new inhaler. if prime Pharmaceuticals can perfectly price discrim inate, producer surplus is Price (dollars per inhaler) 10 MC 8 12 6 20 Quantity (millions) O A $24 million. B.$16million. O C.$32 million. D.$64 million. 2:24 PM O Type here to search ^di ENG 2017-12-03

Explanation / Answer

Answer
the firm produces at MC=P
where
Q=16 and P= willingness to pay

The perfectly price discriminating monopolist charges price equal to willingness to pay and the area between demand and marginal cost is producer surplus
=0.5*(10-2)*16
=$64
the producer surplus is $64
option D

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---