Use the figure below to answer the following questions. Figure 12.4.6
-Prime Pharmaceuticals has developed a new asthma inhaler,for which it has a patent.An inhaler can be produced at a constant marginal cost of $2 per inhaler.The demand curve,marginal revenue curve,and marginal cost curve for this new asthma inhaler are shown in Figure 12.4.6.The patent gives Prime Pharmaceuticals a monopoly for its new inhaler.If Prime Pharmaceuticals can perfectly price discriminate,producer surplus is
A)$16 million.
B)zero.
C)$32 million.
D)$64 million.
E)$24 million.

Question

Use the figure below to answer the following questions.  Figure 12.4.6
-Prime Pharmaceuticals has developed a new asthma inhaler,for which it has a patent.An inhaler can be produced at a constant marginal cost of $2 per inhaler.The demand curve,marginal revenue curve,and marginal cost curve for this new asthma inhaler are shown in Figure 12.4.6.The patent gives Prime Pharmaceuticals a monopoly for its new inhaler.If Prime Pharmaceuticals can perfectly price discriminate,producer surplus is
A)$16 million. 
B)zero. 
C)$32 million. 
D)$64 million. 
E)$24 million.

Quizplus · Accepted Answer

If Prime Pharmaceuticals can perfectly price discriminate, it can capture the entire area under the demand curve above the marginal cost as producer surplus. This means the producer surplus is the entire area between the demand curve and the marginal cost curve, which is $64 million.

Use the Figure Below to Answer the Following Questions