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mart [117]
3 years ago
5

Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair.

Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company’s product at the current price is 1.4, what would you advise the company to do?
Business
1 answer:
bogdanovich [222]3 years ago
8 0

Answer:

The company should increase the number of units she is producing

Explanation:

Since the elasticity of demand for the product is greater than one (1.4), it means the demand for the new drug is elastic, meaning the demand for the new drug is sensitive to price – the higher the price, the lower the quantity demanded and the vice-versa. So the pharmaceutical company should be careful of charging higher than the other competitors.

What the company needs to do to increase its revenue is to produce large quantity of the drug in order to earn higher and gain larger market share and probably economies of scale.

For example, If the company produces 400 units of the drug at $2, the revenue will be $800.

To increase the revenue, the company needs to increase its production.

For example, the increases the production to 500 units at the prevailing price of $2, therefore, the revenue will be $1000

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bearhunter [10]

Answer:

C. 1. Linearity of relationship between the dependent variable and the independent variable within the relevant range. 2. Constant variance of residuals for all values of the independent variable. 3. Independence of residuals. 4. Normal distribution of residuals.

Explanation:

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3 years ago
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A certain firm produces and sells staplers. Last year, it produced 7,000 staplers and sold each stapler for $6. In producing the
Paha777 [63]

Answer:

$6.43

Explanation:

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