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Calculate the profit-maximizing price

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Reference no: EM132422704

You are consulting for a generic pharmaceutical company, Zelextra, is the sole producer of a particular drug. The firm's cost structure is: TC = 1,000Q (no fixed cost), and market research reveals that US demand is given by: Q = 2,250 - 0.25P, so the inverse demand is P = 9000 - 4Q.

a. Calculate the profit-maximizing price, and the resulting profit.

b. In India, the company faces competition from other generics. Assume that other producers have the same cost structure as Zelextra, and you can analyze the market using the supply and demand framework. For simplicity, assume the demand in India is exactly the same as it is in the US.

What will be the equilibrium price and quantity in the market?

What is Zelextra's profit in this market?

c. How much would Zelextra be willing to pay for a monopoly status in India?

Reference no: EM132422704

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