Monopoly is inefficient charges prices higher marginal costs

Assignment Help Business Economics

Reference no: EM13833496

a) Tamiflu, produced by Roche, has so far been the most effective medicine to tackle bird flu. Roche was granted a patent on the drug which enables the pharmaceutical firm to charge higher prices and earn higher profits. The government knows that the patent harms the benefits of consumers, so why is it still willing to grant such a patent to the firm?

b) Monopoly is inefficient as it charges prices higher than marginal costs. Is it feasible for the government to regulate a natural monopoly by setting prices equal to marginal costs?

c) Roche plans to sell Tamiflu at higher prices in Europe and North America and lower prices in developing countries. Why does Roche adopt this pricing strategy?

d) Under what condition can Roche successfully implement the pricing strategy mentioned in (c)?

Reference no: EM13833496

Questions Cloud

Compute the additional investment in accounts receivable : 1) Compute the incremental income after taxes that would result from these projections: 2) Compute the incremental Return on Sales if these new credit customers are accepted: If the receivable turnover ratio is expected to be 3 to 1 and no other asse..

Using the midpoint method-demand for bubble gum is elastic : When the price of bubble gum is $0.50, the quantity demanded is 400 packs per day. When the price falls to $0.40, the quantity demanded increases to 600. Given this information and using the midpoint method, you know that the demand for bubble gum is..

The potential to cause injury or illness : Question 1Think about a time when you were required to accomplish a new or nonroutine task at work that had the potential to cause injury or illness. Discuss how a management of change process could be used to reduce the risks. Who would be involved ..

Underestimated due to the discouraged worker effect : There is one scenario where the unemployment rate would probably be underestimated due to the discouraged worker effect. One where the rate would probably be underestimated due to underemployment.

Monopoly is inefficient charges prices higher marginal costs : Monopoly is inefficient as it charges prices higher than marginal costs. Is it feasible for the government to regulate a natural monopoly by setting prices equal to marginal costs? Roche plans to sell Tamiflu at higher prices in Europe and North Amer..

Managerial ethics highlights three sets of relationships : The section on "Managerial Ethics" highlights three sets of relationships involved in the exercise of managerial ethics-the relationships of the organization to its employees, of its employees to the firm, and of the firm to other economic agents. Ex..

Some customers may have costco membership cards : Some customers may have Costco membership cards. How do you think their elasticity of demand for renting cars (for a week) would compare to that of non-Costco members? Depending on your response, would it then be worthwhile to offer discounts on the ..

Tate of civil conflict in china : The tate of civil conflict in China in 1945 was that: the Communists were the clear winners in the civil conflict. the country was divided between Nationalists and Communists. the oviets had assured the victory of the Nationalists. a truce ended th..

Identify organisation which would benefit from application : Identify an organisation which would benefit from the application of these ideas and explain how the ideas should be applied.

User Account

All Pages