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Explain how this company action affects consumer surplus

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Reference no: EM133422848

Questions: After acquiring the exclusive U.S. rights to a drug that is used for treating a potentially life-threatening disease, a pharmaceutical company becomes the only seller of this drug in the market.

a. Please ILLUSTRATE AND EXPLAIN, using the demand and supply graph, why the price of this drug may increase after the acquisition, compared with the price in a perfectly competitive market.

b. Please explain how this company's action affects consumer surplus.

 

Reference no: EM133422848

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