= (4) Company X is the sole domestic producer of the generic antidepressant Sensitrum with a marginal cost is $2 per dos

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4 Company X Is The Sole Domestic Producer Of The Generic Antidepressant Sensitrum With A Marginal Cost Is 2 Per Dos 1 (137.49 KiB) Viewed 44 times

= (4) Company X is the sole domestic producer of the generic antidepressant Sensitrum with a marginal cost is $2 per dose. Demand is given by Q = 400 – 50P (Q in millions of doses and P in US dollars). There is a second producer in India whose marginal cost is $2.7 (including transportation cost to the US). Firms set prices simultaneously. (i) What will be the US market price (Pus) for Sensitrum? Why? (Hint: You can provide a range such that Pus is less than and/or greater than some amount). (2 points) At that price range what is Company X's share in the domestic market? (2 point) (iii) Now, assume Pus = 2.5. Calculate Company X’s equilibrium profits? (2 points)