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