With a patent on a drug, it has had very little competition and this drug has been a major source of company revenue and profit. However, the patent will soon expire and other drug-manufacturing firms seem to be preparing to enter the market in competition with Happy Pets. Describe the changes in pricing that are likely as competitors enter this market. Describe the current market structure and the type of market structure you think will emerge after the patent expires. What should Happy Pets do in response to these market changes to maximize its profits from this product? What other recommendations would you offer this firm?© BrainMass Inc. brainmass.com October 25, 2018, 9:31 am ad1c9bdddf
Before the patents expire, the firm enjoyed monopoly power. It was the price setting firm. It set the price at a level where the marginal costs of Happy Pets equaled marginal revenue. The demand curve for Happy Pets was the industry demand curve and was downward sloping. The point where the marginal costs equals marginal revenue was the profit maximizing point for Happy Pets. This situation existed when the patent had not expired. The market structure was a monopoly. In a monopoly Happy Pets is the price maker, the ...
This posting gives you a step-by-step explanation of the impact of losing a patent. The response also contains the sources used.
Depreciation, Impairment Loss, and Recorded Cost
1. The John Company purchase a machine on Nov 1 ,2002 for $148,000. at the time of acquisition,the machine was estimated to have a useful life of ten years and an estimated salvage value of $4,000. John has recorded monthly depreciation using the straight line method.on July 1,2011,the machine was sold for $13,000.
What should be the loss recognized from the sale of the machine?
2. Five years ago,Goodwill purchase a patent for $110,000, lower demand for the product under the patent had an estimated useful life of eleven years. It currently has a remaining useful life of four years. the current fair value of the patent is $43,000. Company management estimate that the patent will generate future cash flow of $12,000 per year for the next four years.
What is the amount of the impairment loss to be recognized
3. On February 12, Laker Company purchased a tract of land as a factory site for $175,000.AN existing building on the property was razed and construction was begun on a new factory building in march the same year. additional data are available as follows:
cost of razing old building-----------35,000
title insurance----------- 12,500
artichect fees----------------------- 42,500
new building construction cost---- 875,000
What is the recorded cost of the completed factory building?View Full Posting Details