The Diagram Below Shows the Demand Curve and Marginal Cost

question 44

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 is practicing perfect price discrimination among its buyers.At its profit-maximizing level of output it will produce

• A)Q1 units and charge a price of p1 on the last unit sold.
• B)Q1 units and charge a price of p1 on all units.
• C)Q0 units and charge a price of p0 on the last unit sold.
• D)Q0 units and charge a price of p0 on all units.
• E)It is not possible to determine with the information provided.

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