Shirley has just invented a new pain-relief drug and has obtained a patent, so no one can sell the product without her permission.
Shirley is willing to sell the rights to be the monopoly provider of the new product in the Australian market.
(That is, the firm that buys the rights to use the patent becomes a single-price monopolist selling drug in the Australian market.
) Each unit of the drug costs $2 to make (that is MC = $2 per unit) and the demand curve in Australia for the product is q = 18 – P.
What is the maximum price a firm would be willing to pay for the rights to sell the new drug?