The diagram below shows a pharmaceutical firm's demand curve and marginal cost and marginal revenue curves for a new heart medication for which the firm holds a 20- year patent on its production.
FIGURE 10- 5
-Refer to Figure 10- 5.Assume this pharmaceutical firm charges a single price for its drug.At its profit- maximizing level of output it will produce
A) Q1 units and charge a price of p1.
B) Q1 units and charge a price greater than its average total variable cost.
C) Q0 units and charge a price of p0.
D) Q0 units and charge the perfectly competitive price.
E) Q0 units and charge a price of p2.
Correct Answer:
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