Economics 9708 · AS & A Level · Price elasticity of demand

Price elasticity of demand — practice question

Part 1

A recent newspaper report noted that a pharmaceutical company charged customers in the United States (US) US$800 for one treatment, whereas customers in Egypt were charged US$80 for the identical treatment.

(a)[12]

Explain why the company may choose this policy and what conditions are needed for the policy to succeed.

(b)[13]

Discuss whether oligopolistic industries always act against consumers' interests.

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