Use the figure below to answer the following questions.

Figure 13.4.6
-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 13.4.6. 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 13.4.6
-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 13.4.6. 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 captures all consumer surplus as producer surplus. The area under the demand curve and above the marginal cost curve represents the total surplus, which is $64 million.

Use the Figure Below to Answer the Following Questions