The BTC Co. has a patent on one of its medications used in chronic pain. The medication sells for $1 per daily dose and its marginal cost is estimated to be a constant at $0.20.
(a) Assuming linear demand and marginal cost curves, use this information to estimate the deadweight loss from monopoly pricing if the firm currently sells 1,000 doses per day.
(b) Can this loss (in terms of deadweight loss) be justified? On what grounds?