Epi-pens are a name-brand medicine. Epi-pens are used to quickly inject epinephrine into the body in the event of a severe allergic reaction. Many Americans require Epi-pens due to potentially life-threatening allergies. Using the concept of elasticity, explain why the government would likely not impose a tax on the market for Epi-pens. Suppose the government believes the price of Epi-pens is too high, so they impose a price control on the market. Would the government use a price floor or a price ceiling in this situation? What effect would the chosen price control have on the market. Suppose that the number of adults developing severe allergies increases. At the same time the patent for Epi-pens expires, allowing new producers of Epi-pens to enter the market. Explain what will happen to the equilibrium price and quantity of Epi-pens.
Epi-pens are a name-brand medicine. Epi-pens are used to quickly inject epinephrine into the body in the event of a severe allergic reaction. Many Americans require Epi-pens due to potentially life-threatening allergies. Using the concept of elasticity, explain why the government would likely not impose a tax on the market for Epi-pens. Suppose the government believes the price of Epi-pens is too high, so they impose a price control on the market. Would the government use a price floor or a price ceiling in this situation? What effect would the chosen price control have on the market. Suppose that the number of adults developing severe allergies increases. At the same time the patent for Epi-pens expires, allowing new producers of Epi-pens to enter the market. Explain what will happen to the equilibrium price and quantity of Epi-pens.
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter6: Simple Pricing
Section: Chapter Questions
Problem 1MC
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Epi-pens are a name-brand medicine. Epi-pens are used to quickly inject epinephrine into the body in the event of a severe allergic reaction. Many Americans require Epi-pens due to potentially life-threatening allergies.
- Using the concept of elasticity, explain why the government would likely not impose a tax on the market for Epi-pens.
- Suppose the government believes the price of Epi-pens is too high, so they impose a price control on the market.
- Would the government use a
price floor or aprice ceiling in this situation? - What effect would the chosen price control have on the market.
- Would the government use a
- Suppose that the number of adults developing severe allergies increases. At the same time the patent for Epi-pens expires, allowing new producers of Epi-pens to enter the market. Explain what will happen to the
equilibrium price and quantity of Epi-pens.
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