Question 3, (20 points) Stopstinx is an over-the-counter drug that is used to treat chronic foot...

 

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Question 3, (20 points) Stopstinx is an over-the-counter drug that is used to treat chronic foot odor. To be effective it must be taken daily. During an A/B marketing test, researchers found the following: -When Stopstinx is priced at $5 for a weekly supply, 100 units are sold per week. -When Stopstinx is priced at $10 for a weekly supply, 75 units are sold per week. a) (5 points) Using the characteristics of elastic or inelastic goods, explain whether you expect demand for Stopstinx to be elastic, unit-elastic, or inelastic. b) (5 points) What happened to revenue when the price rose from $5 to $10? Show your work. Does this agree or disagree with your answer to (a), above? c) (5 points) Calculate the price-elasticity of demand for Stopstinx. Does this agree or disagree with your answer to (a), above? d) (5 points) The Yamazaki Corporation has purchased the patent for Stopstinx and raised the price to $100 for a weekly supply. What do you predict will happen to the price and quantity of Stopstinx? Fully explain your answer. Question 3, (20 points) Stopstinx is an over-the-counter drug that is used to treat chronic foot odor. To be effective it must be taken daily. During an A/B marketing test, researchers found the following: -When Stopstinx is priced at $5 for a weekly supply, 100 units are sold per week. -When Stopstinx is priced at $10 for a weekly supply, 75 units are sold per week. a) (5 points) Using the characteristics of elastic or inelastic goods, explain whether you expect demand for Stopstinx to be elastic, unit-elastic, or inelastic. b) (5 points) What happened to revenue when the price rose from $5 to $10? Show your work. Does this agree or disagree with your answer to (a), above? c) (5 points) Calculate the price-elasticity of demand for Stopstinx. Does this agree or disagree with your answer to (a), above? d) (5 points) The Yamazaki Corporation has purchased the patent for Stopstinx and raised the price to $100 for a weekly supply. What do you predict will happen to the price and quantity of Stopstinx? Fully explain your answer.

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