Answer to Question #43228 in Microeconomics for Chilima Hanzuki

Question

The XYZ drug company is considering investing in research that would lead to a cost-saving innovation in its production of a special rabies vaccine. Assuming the firm can keep this innovation solely for its own use, will the increased profits from the lower marginal costs be greater if the firm is in a competitive market or if it is a monopoly? Explain your answer in a graph (ignore AC curves) and with words.