In 1987, a company called Burroughs-Wellcome introduced its anti-AIDS drug AZT and an introductory price of $12,000 annually. Suppose the marginal cost of producing an annual dosage of the drug was $100 and that $12,000 was the optimal price. What is effect on the number of annual doses sold of a 10% increase in the price of the drug? Explain how you obtain your answer, showing all calculations. (Use the optimal pricing formula to determine the price elasticity of demand, then use that elasticity to answer the question.)

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Optiumal price 12000 MC 100 Optiumal price MC11E P 12000 100 11E P 11E P 10012000 ... View the full answer