# What would happen to sales of Drug E if the makers raised prices by 10 percent?

8.16) A study estimates that the price elasticity of demand for

Drug E is -3.41, but the price elasticity of demand for the class

of drugs as a whole is -0.22.

What would happen to sales of Drug E if the makers raised prices

by 10 percent?

What would happen to industry revenues if all manufacturers

raised prices by 10 percent?

Which is more elastic: the demand for Drug E or the whole class

of drugs? Why is one more elastic than the other?

Why are the answers so different? Does this difference make

sense?

8.17) The price elasticity of demand for the services of Kim

Jones, MD, is -4.0. The price elasticity of demand for physicians’

services overall is -0.1.

Why is demand so much more elastic for the services for Dr.

Jones than for the services of physicians in general?

If Dr. Jones reduced prices by 10 percent, how much would volume

and revenue change?

Suppose that all the physicians in the reduced prices by 10

percent. How much would the total number of visits and revenue

change?

Why are your answers to questions b and c so different?

8.13. If the cross-price elasticity of clinic visits with

respect to pharmaceutical prices is -0.18, how much will ambulatory

visit change if pharmacy prices rise by 5 percent? Are

pharmaceuticals substitutes for or complements to clinic

visits?

8.10) The price elasticity of demand is -0.12. Is demand elastic

or inelastic?

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