The SSS Co

question 90

Essay

The SSS Co.has a patent on a particular medication.The medication sells for $1 per daily dose and marginal cost is estimated to be a constant at 20¢.Assuming linear demand and marginal cost curves,use this information to estimate the deadweight loss from monopoly pricing if the firm currently sells 1,000 doses per day.Can this loss be justified?

---

Definitions:

Enforce

To compel obedience or compliance through legal or authoritative means; to ensure the fulfillment of a requirement.

Give Consideration

In contract law, the act of offering something of value, required by both parties for a contract to be legally binding.

Promissory Estoppel

A legal principle that prevents a person from going back on a promise even when a legal contract does not exist.

Unilateral Contract

An agreement in which one party makes a promise in exchange for an act performed by another party.