Suppose a profit-seeking pharmaceutical company has just created a blockbuster new antiviral drug. It currently charges...
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Suppose a profit-seeking pharmaceutical company has just created a blockbuster new antiviral drug. It currently charges a price of $130 and sels 100 million doses. However, a reduction in price by $20 will increase sales to 130 milion On a graph, show the price effect (loss of revenue due to the lower price) and quantity effect (increase in revenue due to the higher quantity) 1.) Using the rectangle drawing tool, show the price effect (loss of revenue due to the lower price), Label your area Price effect. 2) Using the rectangle drawing tool, show the quantity effect (increase in revenue due to the higher quantity). Label your area Quantity effect Carefully follow the instructions above and only draw the required objects. Find the area of each of these rectangles. State your answers in billions of dollars The area of the price effect is $billion. (Round your answer to one decimal place.) The area of the quantity effect is $billion (Round your answer to one decimal place.) Based on these calculations, what is the effect of cutting price on total revenue? OA. Total revenue decreases OB. Total revenue increases OC. Total revenue remains unchanged. COTT 200 180 160- 140- 120- 100- no- 00- 40- 20- Price (5) 20 40 000 100 120 140 160 Quantity (in millions of pits) ou Suppose a profit-seeking pharmaceutical company has just created a blockbuster new antiviral drug. It currently charges a price of $130 and sels 100 million doses. However, a reduction in price by $20 will increase sales to 130 milion On a graph, show the price effect (loss of revenue due to the lower price) and quantity effect (increase in revenue due to the higher quantity) 1.) Using the rectangle drawing tool, show the price effect (loss of revenue due to the lower price), Label your area Price effect. 2) Using the rectangle drawing tool, show the quantity effect (increase in revenue due to the higher quantity). Label your area Quantity effect Carefully follow the instructions above and only draw the required objects. Find the area of each of these rectangles. State your answers in billions of dollars The area of the price effect is $billion. (Round your answer to one decimal place.) The area of the quantity effect is $billion (Round your answer to one decimal place.) Based on these calculations, what is the effect of cutting price on total revenue? OA. Total revenue decreases OB. Total revenue increases OC. Total revenue remains unchanged. COTT 200 180 160- 140- 120- 100- no- 00- 40- 20- Price (5) 20 40 000 100 120 140 160 Quantity (in millions of pits) ou
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Price effect As price decreaseeach quantity is sold at lower price so sell... View the full answer
Related Book For
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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