Question

Suppose a drug manufacturer sells a new drug for twitchy feet. The market demand curve for the drug is P=105-3Q, where P is the market price and Q is the market quantity. Also suppose the marginal cost for manufacturing is 40/ unit.
A) Assuming the firm is an unregulated monopolist, what quantity and price should the firm offer?
Quantity =______
Price = $_______
B) Now suppose, the manufacturer has identified two separate classifications of customers for their twitchy feet product. Because of legal restrictions, the drug cannot be bought by one group of customers and sold to the other. The demand expression for group one is P1=120-6Q1. The demand expression for group 2 is P2=90-6Q2. MC is still 40.
Determine the price and quantity that should be offered to each group.
Quantity Market 1= ________
Price in Market 1 = $_______
Quantity in Market 2 =. _______
Price in Market 2 = $________

Answer 1