Background: There are 4-5 pharmaceutical companies (mainly fromChina, Germany, and the USA) that are researching a cure/vaccinefor corona – hopefully, one of these companies will have a solutionfor the world shortly– in the meantime, some governments areproposing for alternative treatments medicine like CHLOROQUINE(originally used to treat Malaria)
One company finally succeeds in producing the vaccine. Describeor explain in detail the following situations. ( 15 points) :
a) What is the new market structure this Pharma company belongsto now ? Why ?
b) List the 5 market structure characteristics for a Monopolyand explain the relation to the Corona vaccine .
c) How does Initial supply and demand look like for the newvaccine? (what about initial elasticity and price ?)
d) How happens in Long term for supply and demand if newpharmaceutical companies find a similar vaccine ? (what about longterm elasticity and price under the same conditions ?)
e) Describe what happens to Economic profits in the initialphase and the long term
f) Explain how the creative destruction concept applies (fromChloroquine to Corona vaccine) . Are there any benefits to everyonefrom having a Monopoly?
