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1. Consider the following market for EpiPen a monopolist epinephrine auto injector. $1000 MC $900 $800 AVTO Price per EpiPen
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Answer #1

a)

Condition for profit maximization : MR = MC

Output = 175 units.

b)

Price chaged : $ 600.

c)

Profit = TR – TC.

= 175*600 – 175*400

= 35,000

d)

if there is signficant barrier to entry, monopolist would continue to earn profit even in long run.

e)

Allocative efficiency: P = MC

Q =212.5

P =500

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