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a) Prices for a medical procedure average $1,000 and range from$800 to $1,200. How much could a consumer paying full price save by getting the best price? Suppose that insurance is responsible for75 percent of the consumer's spending and that out-of-pocket spending is limited to $250. How much could the consumer save by getting the best price?
b) A proposal has been advanced to limit advertising of pharmaceutical prices to prevent unfair pricing by national chains.You estimate that limits on price advertising will change the price elasticity of demand from -5.63 to -.4.43. The marginal cost of atypical prescription is $40. A typical small pharmacy fills 25prescriptions per day. A typical consumer fills 20 prescriptions per year. What will the economic effects of the limit be on consumers and pharmacists? Who is likely to b the more effective advocate for their position?
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