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,consumer surplus is represented by

Question

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,consumer surplus is represented by

Quizplus · Accepted Answer

At the profit-maximizing level of output, the firm charges a price of $80 per unit. This price is represented by point A on the demand curve. Consumer surplus is the area between the demand curve and the price paid by consumers, up to the quantity sold. At this level of output, consumer surplus is represented by areas D and E.

The Diagram Below Shows a Pharmaceutical Firm's Demand Curve and Marginal