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sveticcg [70]
3 years ago
10

Recently, Pfizer and Allergan – the makers of Viagra and Botox, respectively – initiated a $160 billion merger. Pharmaceutical c

ompanies tend to spend a greater percentage of sales on R&D activities than other industries. The government encourages these R&D activities by granting companies patents for drugs approved by the Food and Drug Administration. For instance, Allergan spent large sums of money developing its popular wrinkle-removing neurotoxin, Botox, which is currently protected under a patent. Botox sells for about $15 per vial.Calculate the Lerner index if the marginal cost of producing Botox is $1.50 per vial.
Business
1 answer:
Lilit [14]3 years ago
3 0

Answer:

Lerner index for Botox = 0.9

Explanation:

The Lerner index measures market power in an industry. The formula for calculating the Lerner index is: L = (P - MC) / P

Lerner index for Botox = ($15 - $1.50) / $15 = 0.9

0.9 in the Lerner index means that a company has a very large market power. Under this situation, this is quite logical since Allergen has a monopoly on Botox, at least until the patent expires.

The Lerner index varies between 0 and 1, with 0 being a situation of perfect competition and 1 a monopolistic situation.

You might be interested in
Indirect competition includes goods or services which are: a.closely priced. b.indirectly distributed. c.similar. d.substitutes.
AURORKA [14]

Answer:

Substitutes

Explanation:

Competition in business occurs when a two companies produce and sell similar product.  It is further grouped into direct and indirect competition.

While direct competition occurs between companies producing almost the same products , for example breweries producing beers , indirect competition happens between companies selling goods that are not directly similar but can also be used to achieve the same purpose if the other good is not available. Indirect competitors always have a way of sharing or winning over potential customers.

5 0
3 years ago
Magic City Enterprises manufactures a beautiful bookcase. Listed below are a number of costs incurred. Identify each cost as eit
FrozenT [24]

Answer:

1. Factory Rent  = Fixed , Product (Indirect Cost)

2. Advertising   = Fixed , Period

3. Packing Supplies for Shipping  = Variable, Period

4. Factory Security Guard  = Fixed, Product (Indirect Cost)

5. Wages of Employees Who Sand the wood  = Variable, Product (Direct Cost)

6. Administrative Assistant in Corporate office  = Fixed , Period

7. Paper Towels in the Men's Room in the Factory  = Fixed , Product (Indirect Cost)

8. Executive Jet  = Fixed, Period

9. Lumber  = Variable, Product (Direct Cost)

10. Depreciation on Factory Tools (Straight-Line) = Fixed, Product (Indirect Cost)

Explanation:

Product versus Period Cost.

A product cost is attached to the cost object and is included in the valuation of the cost object.All manufacturing costs are product costs.

Period costs are not attached to the products. Non-manufacturing costs are Period costs.

Fixed versus Variable.

Behavior of costs in relationship with Activity will tell us whether a cost is a Fixed cost or Variable Cost.

Fixed Costs remain the same for any level of activity, whilst variable costs vary in direct proportion to with the level of activity.

Direct versus Indirect.

By observation of the cost object, we are able to identify is a cost is a direct cost or indirect cost.

Direct costs can be easily traced on the cost object. Indirect costs are difficult to trace on the cost object.

4 0
3 years ago
Select all that apply.
Oxana [17]
Probably “would you enjoy reading a fashion magazine”
5 0
3 years ago
Read 2 more answers
Suppose there are only three firms in a market. The largest firm has sales of $500 million, the second-largest has sales of $300
belka [17]

Answer:

50% share.

Explanation:

Given:

There are only three firms in a market.

The largest firm has sales of $500 million.

The second-largest has sales of $300 million.

The smallest has sales of $200 million.

Question asked:

The market share of the largest firm is ?

Solution:

As we know:

Market\ share=\frac{Total\ sales\ of\ the\ firm}{Total\ sales\ of\ the \ market} \times100

Total sales of the largest company = $500 million.

Total sales of the market = Sales of largest firm + Sales of second largest firm+ Sales of smallest firm

Total sales of the market = $500 million + $300 million + $200 million

                                          = $1000 million

Market\ share=\frac{Total\ sales\ of\ the\ firm}{Total\ sales\ of\ the \ market} \times100

                       =\frac{500}{1000} \times100\\ \\ =\frac{50000}{1000} \\ \\ =50\%

Therefore, the market share of the largest firm is 50%.

7 0
3 years ago
The merger of McKesson, the leading U.S. drug wholesaler, and HBOC, a producer of health-care inventory software, is an example
Elis [28]

The merger is an example of

<h3>What is a vertical merger?</h3>

A merger occurs when one firm is absorbed by another firm. When a merger occurs, one of the firms would not exist as a separate entity while the other firm would continue to exist.

A vertical merger is when a firm purchases another firm in the same production line. e.g. a baker purchases a pastry distributing company.

To learn more about mergers, please check: brainly.com/question/1086715

5 0
2 years ago
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