Use the space below and the back to write out and clearly indicate your answers. do not use this sheet as scrap paper, but use it to neatly present your work. three drug companies each make their own drug that treats a medical condition. they are the only drugs that can treat this condition, and this condition is the only malady for which these drugs are effective. the companies each have a patent on their particular drug compound, but the drugs are similar and about equally effective for treating the condition, so the firms behave very competitively. the demand curve for courses of treatment (which will cure the medical condition) is qd = 12,000 - 12p. the drugs were developed long ago, so firms just have to pay the manufacturing and retailing costs. each firm has a cost of supplying q courses of treatment given by 3q2.
1) calculate each company's minimum average cost. ipt
2) calculate each company's supply curve.
3) calculate the market supply curve.
4) calculate the market equilibrium price.
5) calculate the profit that one firm would earn in this market.
6) is the profit you calculated above greater than 0? why? do the patents that these firms hold have a value? if so, what is it? explain your answer.