What can be done to boost the profits

Assignment Help Econometrics
Reference no: EM13241335

You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales ($125 million last year) and a low marginal cost of producing the product ($0.25 per pill), your company has yet to show a profit from selling the drug. This is, in part, due to the fact that the company spent $1.2 billion developing the drug and obtaining FDA approval. An economist has estimated that, at the current price of $1.25 per pill, the own price elasticity of demand for the drug is -2.5. Based on this information, what can you do to boost profits? Explain.

Reference no: EM13241335

Questions Cloud

The eastern end to seattle : Interstate 90 is the longest of the ease-west U.S. interstate highways with its 3,112 miles stretching from Boston, MA at I-93 on the eastern end to Seattle
Determine the annual marginal tax rates for the next 3 years : A contractor expects to have an annual taxable income of $400,000 from its regular business for the next 3 years. The contractor is considering buying a new piece of equipment that costs $115,000. The equipment falls into the MACRS seven year
What is the mass spectrum of an organic compound : The mass spectrum of an organic compound shows the relative abundance of M to be 34.29% and M+1 to be 8.901%. Assuming the peaks are caused by 12C and 13C isotopes, determine the number of carbon atoms in the compound. Natural abundance: 12C is 98..
The standard normal distribution variable : How does Z the standard normal distribution variable relate to the standard deviation of its distribution and identify the critical value suitable for conducting a two-tail test of the hypothesis at the 2% level.
What can be done to boost the profits : You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales ($125 million last year) and a low marginal cost of producing the product ($0.25 per pill)
National basketball association calculates many statistics : The national basketball association calculates many statistics, as do other professional sports organizations.
Find the maximum acceleration : A cup of coffee is on a table in an airplane flying at a constant altitude and a constant velocity, What is the maximum acceleration that the plane can have without the cup sliding backward on the table
What score would be needed to be in the 85th percentile : A test is normally distributed with a mean of 40 and a standard deviation of 7. (a) What score would be needed to be in the 85th percentile?
Explain the gas while maintaining the internal pressure : 1.50 mol of helium gas in a cylinder is held at a volume of 22.4 L by a piston at 273K and 1.00 atm. Heat is supplied to the system to double the volume and temperature of the gas while maintaining the internal pressure at 1.00 atm.

Reviews

Write a Review

Econometrics Questions & Answers

  Derive the formula for the income elasticity of money

If the Central Bank in uenced the nominal rate in such a way as to make the Quantity Theory of Money hold true (to your answer in the previous section), then what level of i (as a percentage) would they target

  Determine opportunity cost of delivering an extra pizza

The comparative advantage for pizza production belongs to __________ and the comparative advantage for pizza delivery belongs to __________. Based on their comparative advantages, Pat should specialize in _______ while Corey should specialize in ____..

  How many security guards should the firm hire

The firm wants to hire the optimal number of security guards. The following table shows how the number of security guards affects the number of radios stolen per week. Number of Number of radios Security Guards stolen per week 0 50 1 30 2 20 3..

  What will happen because it is out of quilibrium

Calculate total revenue, marginal revenue, marginal cost, and average cost at each level of sales fo the store. If Swim N Style is a profit maximizer, what number of suits will it sell per hour? What will its price and profit be? How can you tell wha..

  When the same efforts must be made to uncork and pour bottle

Most restaurant customers tip according to a percentage rule - between 15 and 25 percent of the bill. Diners who have dinner and a $20 bottle of wine usually pay the same percentage of the bottle price as diners who order a $100 bottle.

  When producers will bear the full economic burden of the tax

If supply is given by Qs = 1000 and the government imposes a tax of 50 on iPhones that must be paid by sellers then Producers will bear the full economic burden of the tax but how come there is no deadweight loss

  What term do economists use to describe this second outcome

If the CPI was 110 last year and is 121 this year, what is this year's rate of inflation In contrast, suppose that the CPI was 110 last year and is 108 this year. What is this year's rate of inflation What term do economists use to describe this s..

  How many units must sold for the company to breakeven

A manufacturing company leases a building for $100,000 per year for its manufacturing facilities. In addition, the machinery in this building is being paid for in installments of $20,000 per year. Each unit of the product produced can be sold for ..

  Determine the total number of holes dug

To dig a hole, it takes one person (P) and one shovel (S). The total number of holes dug is given by the production function h=f(P,S)=min(P,S). If you currently have 2 persons and 4 shovels, what is the marginal product of persons

  Which security to purchase related to degree of risk

Suppose that a security costs $3,000 today and pays off some amount b in one year. Suppose that b is uncertain according to the following table of probabilities a) Calculate the return (in percent) fore each value of

  Explain how gm viewed its marginal revenue product

In 2009 General Motors (GM) announced that it would reduce employement by 21,000 workers. What does this decision reveal about how GM viewed its marginal revenue product (MRP) and marginal resource cost (MRC)

  Define relationship between quality rating and experience

The general Manager of an engineering firm wants to know whether a technical artist's experience influences the quality of his or her work. A random sample of 24 artists is selected and their years of work experience and quality rating(as assessed..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd