Question

Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company’s product at the current price is 1.4, what would you advise the company to do?

Answer 1

Answer:

you would advise the company to lower the prices.

Explanation:

when the elasticity of demand is 1.4 means that the percentage change in qty is greager than percentage change in price this means that there will be going to be higher revenue if we lower prices thus we should lower prices.

Therefore, you would advise the company to lower the prices.