The Diagram Below Shows the Demand Curve and Marginal Cost

question 112

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 generate a total profit represented by

• A)the sum of areas A through K.
• B)areas A + B + C + F + G.
• C)areas B + C + F + G + H + I.
• D)areas D + E.
• E)It is not possible to determine with the information provided.

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Definitions:

Mode

The value that appears most frequently in a data set, a measure of central tendency in statistics.

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Relating to an ideal standard or model, often reflecting what is deemed to be the correct or normal way of doing something.

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