The Diagram Below Shows the Demand Curve and Marginal Cost

question 2

Multiple Choice

The diagram below shows the demand curve and marginal cost and marginal revenue curves for a new heart medication for which the pharmaceutical firm holds a 20-year patent on its production and sales.This protection gives the firm monopoly power for the 20 years of the patent.
FIGURE 10-6
-Refer to Figure 10-6.Assume this pharmaceutical firm charges a single price for its drug.At its profit-maximizing level of output it will produce

• A)Q0 units and charge the perfectly competitive price.
• B)Q0 units and charge a price of p0.
• C)Q1 units and charge a price of p1.
• D)Q0 units and charge a price of p2.
• E)Q1 units and charge a price greater than its average total variable cost.

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