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Category > Economics Posted 12 Jul 2017 My Price 7.00

Your firm spent $100 million developing a new drug.

Your firm spent $100 million developing a new drug.  It has now been approved for sale, and each pill cost $1 to manufacture.  Your market research suggests that the price elasticity of demand in the general public is -1.1.

 

a. What price do you charge the public?

b. What would happen to profits if you charged twice as much?

c. What role does the $100 million in development costs play in your pricing decision?

d. The Medicaid agency has made a take-it-or-leave-it offer of $2 per pill. Do you accept it? Why or why not?

Answers

SuperTutor
(15)
Status NEW Posted 12 Jul 2017 12:07 AM My Price 7.00

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