question archive The global pharmaceuticals giant, DrugCo, has had great success with Xamoff, and over-the counter medicine that reduces exam-related anxiety A patent currently protects Xamoff from competition, although rumors persist that similar products are in development Two years ago, DrugCo sold 25 million units for a price of $10 for a package of ten Last year it raised the price to $11, and sales fell to 22 million units a DrugCo is considering a further price increase to $12 Estimate the impact on the quantity sold Do you expect revenue to increase or decrease? b A financial analyst estimates the cost of production at $2 a package What price maximizes DrugCo’s profit? c When the patent expires in 2013, what do you expect to happen to demand? What about the elasticity?
Subject:ManagementPrice: Bought3
The global pharmaceuticals giant, DrugCo, has had great success with Xamoff, and over-the counter medicine that reduces exam-related anxiety A patent currently protects Xamoff from competition, although rumors persist that similar products are in development Two years ago, DrugCo sold 25 million units for a price of $10 for a package of ten Last year it raised the price to $11, and sales fell to 22 million units
a DrugCo is considering a further price increase to $12 Estimate the impact on the quantity sold Do you expect revenue to increase or decrease?
b A financial analyst estimates the cost of production at $2 a package What price maximizes DrugCo’s profit?
c When the patent expires in 2013, what do you expect to happen to demand? What about the elasticity?