Question

In order for Bigby Pharma to sell more units of their patented drug with an elastic...

In order for Bigby Pharma to sell more units of their patented drug with an elastic demand, they must: (Please explain how to get this answer)

A) Lower the price of all units

B) Lower the price of the next unit

C) Supply more of the drug

D) Increase the price of all units

E) Increase the price of the next unit

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Answer #1

option a

The demand curve is downward sloping and if it is facing elastic demand then it can sell more by decreasing price as the price decreases the demand increases because the elasticity is a measure of the quantity change because of the change in price of the good in proportion, so if the firm wants to increase the sell then the firm should decrease the price of all units, as decreasing the price of only the next unit might create the seller's market.

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