Use the space below and the back to write out and clearly indicate your answers. do not use this sheet as scrap paper, but use it to neatly present your work. three drug companies each make their own drug that treats a medical condition. they are the only drugs that can treat this condition, and this condition is the only malady for which these drugs are effective. the companies each have a patent on their particular drug compound, but the drugs are similar and about equally effective for treating the condition, so the firms behave very competitively. the demand curve for courses of treatment (which will cure the medical condition) is qd = 12,000 - 12p. the drugs were developed long ago, so firms just have to pay the manufacturing and retailing costs. each firm has a cost of supplying q courses of treatment given by 3q2.
1) calculate each company's minimum average cost. ipt
2) calculate each company's supply curve.
3) calculate the market supply curve.
4) calculate the market equilibrium price.
5) calculate the profit that one firm would earn in this market.
6) is the profit you calculated above greater than 0? why? do the patents that these firms hold have a value? if so, what is it? explain your answer.
1 all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.
2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable
things that you do not need to have in order to survive, but would like to have
things that you must have in order to survive
tasks that a business perform for customers
items that people can use to make or obtain what they need or want
to settle or decide by choice of alternatives or possiblities
4 i really dont know
the correct answer is b.)