Table 15-1
A monopolist faces the following demand curve:
Marginal cost is constant at $8 per unit.
-Refer to Table 15-1.Suppose the firm depicted in the table is selling a prescription drug for which it had a patent,but the patent has expired.As new firms enter the market and sell the generic version of this drug competitively,what quantity will be sold?
A) 3 units
B) 4 units
C) 5 units
D) 6 units

Question

Table 15-1
A monopolist faces the following demand curve:
  Marginal cost is constant at $8 per unit.
-Refer to Table 15-1.Suppose the firm depicted in the table is selling a prescription drug for which it had a patent,but the patent has expired.As new firms enter the market and sell the generic version of this drug competitively,what quantity will be sold?
A) 3 units 
B) 4 units 
C) 5 units 
D) 6 units

Quizplus · Accepted Answer

When the patent expires and the market becomes competitive, the firm will sell the quantity where price equals marginal cost. In a perfectly competitive market, firms produce where price equals marginal cost, which typically results in a higher quantity sold compared to a monopolistic market.

Table 15-1 A Monopolist Faces the Following Demand Curve