Suppose that the marginal cost per drug treatment is


1. The inverse demand for a drug that treats insomnia is given by P = 6,000 - 20Q, where Q measures the number of drug treatments and P is the price per treatment. Suppose that the marginal cost per drug treatment is constant at $20. What is the profit-maximizing price per drug treatment?

  • $3,010
  • $1,505
  • $2,000
  • $600

2. Suppose the market for peaches is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the peaches insect-free damage the environment by an estimated $0.5 per bushel of peach. Suppose QD = 1000 - 100P and QS = -100 + 100P. The price consumers would have to pay for the market to achieve the socially optimal level of production is

  • 5.75
  • 6.75
  • 5
  • 6

 

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Business Economics: Suppose that the marginal cost per drug treatment is
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