Explain how the topic pertains to both given concepts

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Problem

The type of market structure in which a firm operates will determine how it behaves in order to profit maximize. You will be reading about two of these market structures, competition and monopoly. Monopoly firms will face a different environment when profit maximizing than does a firm in competition. Given what you learned about elasticity last week and monopolies this week, read this article, "Martin Shkreli on raising price of AIDS drug."

1. Explain how this topic pertains to both concepts (elasticity and monopoly) and the firm's rationale behind raising the price of this life-saving drug by 5000%.

2. Give your own opinion about whether the government should place price controls on pharmaceutical firms to avoid price hikes such as this and what impact this might price controls have on research and development for new drugs. Please note: Your opinion should be supported using the economic concepts from class. If you use any other sources, be sure to cite them within the text as well as provide a bibliographical citation at the end.

Reference no: EM131918688

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