A pharmaceutical company can produce each pill of a new drug at a constant marginal cost given by MC
A pharmaceutical company can produce each pill of a new drug at a constant marginal cost given by MC = 5. Note that since the marginal cost is constant, then the average cost of producing pills is also 5. Inverse demand for the pills is given by P = 25 Q and the company’s marginal revenue curve is thus given by MR = 25 2Q.