Assignment Question:

Read the article linked as below and answer the following questions

http://www.cbsnews.com/news/generic-drug-price-increases-5000-percent-overnight/

Question 1

Using the concept of elasticity, explain how by increasing the price of Daraphrim, Turing Pharmaceuticals can increase its revenue. Explain the prevailing factors that support the increase of Daraphrim's price.

Question 2

Critically assess the social impact by analyzing the pros and cons of Turing Pharmaceuticals' action of increasing the price of Daraphrim by 5000 fold.

Question 3

Explain what policies or measures that the government can take in order to prevent such extraordinary price increase by pharmaceutical companies.

Question 4

Provide another example that you have come across, where consumers are saddled with high price due to their inelastic demand on some kind goods.