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# Mirk Labs is a pharmaceutical company that currently enjoys

Mirk Labs is a pharmaceutical company that currently enjoys a patent monopoly in Europe, Canada, and the United States on Zatab, an allergy medication. The global demand for Zatab is: Qd = 15.0 – 0.2P where Qd is annual quantity demanded (in millions of units) of Zatab, and P is the wholesale price of Zatab per unit. A decade ago, Mirk Labs incurred \$60 million in research and development costs for Zatab. Current production costs for Zatab are constant and equal to \$5 per unit. (a) What wholesale price will Mirk Labs set? How much Zatab will it produce and sell annually? How much annual profit does the firm make on Zatab? (b) The patent on Zatab expires next month, and dozens of pharmaceutical firms are prepared to enter the market with identical generic versions of Zatab. What price and quantity will result once the patent expires and competition emerges in this market? Explain your answer.
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Customer: replied 4 years ago.

How would I put this in paragraph form to explain this answer. I need to make a 3 page paper out of this answer. I could use a more detailed explanation..

Oh. You could then elaborate on underlying theory of profit maximization. For profit maximization in part A, you could use views presented at

http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=monopoly,+profit+maximization

And for part B, you could use

http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=perfect+competition,+profit+maximization

http://www.csun.edu/~hceco008/c8b.htm

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