Asked by
Danny Coppinger
on Oct 25, 2024
Verified
Bancroft Pharmaceuticals has a patent on a new medication used to treat high blood pressure, so it is the monopoly seller of this new drug product. The marginal cost of producing one dose of the drug is $10, and the elasticity of demand for the product is -3. What is the profit maximizing monopoly price for this patented drug product?
A) $10
B) $12.50
C) $15
D) $30
Profit Maximizing
is a strategy where a firm decides on the quantity of production and price to maximize its profit.
Elasticity Of Demand
A gauge of the extent to which demand for an item is affected by fluctuations in its price.
- Understand the approach a monopolist takes to pinpoint the output and price that ensures the highest profit.
- Discern the association between demand elasticity, marginal returns, and the approaches to pricing in a monopolistic setting.
Verified Answer
JW
Learning Objectives
- Understand the approach a monopolist takes to pinpoint the output and price that ensures the highest profit.
- Discern the association between demand elasticity, marginal returns, and the approaches to pricing in a monopolistic setting.