Asked by Alexis Jones on Sep 24, 2024
Verified
A pharmaceutical company faces a price regulation where it cannot charge any higher than $5,000 for a lifesaving drug.The company knows that the patients put a high value on this product and are willing to pay up to $10,000 for it.The company will likely
A) Not do anything-it is prohibited by law to increase its price
B) Bundle the drug with periodic blood testing,selling the bundle for $10,000
C) Require that the patients have the drug administered by the company's medical staff,for an additional $5,000
D) Both B&C
Price Regulation
The imposition of controls by a government on the price(s) that can be charged for goods and services in a market.
Lifesaving Drug
A medication that is essential for survival, often used to treat a life-threatening condition or disease.
Bundle
The practice of selling multiple products or services together as a single combined unit, often at a reduced price compared to purchasing the items separately.
- Analyze tactics companies adopt to sidestep controls on pricing and rental charges.
Verified Answer
Option C of requiring the patients to have the drug administered by the company's medical staff for an additional fee is another effective strategy. The service provided by the company can be deemed necessary for the safe and effective use of the drug, which can justify the additional cost.
Therefore, the best approach for the company would be to implement both options B and C. By doing so, the company can increase its revenue while still adhering to the price regulation.
Learning Objectives
- Analyze tactics companies adopt to sidestep controls on pricing and rental charges.
Related questions
A Pharmaceutical Company Faces a Price Regulation Where It Cannot ...
A Pharmaceutical Company Faces a Price Regulation Where It Cannot ...
The Management of a Rental Building Faces a Rent Control ...
The Management of a Rental Building Faces a Rent Control ...
One Common Example of a Price Ceiling Is Rent Control