Suppose that the price elasticities of demand for pharmaceutical products differ across several customer groups.If senior citizens have the most elastic demand for pharmaceutical products,they will receive
A) the greatest quantity of pharmaceutical products.
B) the highest price for pharmaceutical products.
C) the lowest price for pharmaceutical products.
D) the smallest quantity of pharmaceutical products.

Question

Quizplus · Accepted Answer

If senior citizens have the most elastic demand for pharmaceutical products, this means that they are highly sensitive to changes in price. Therefore, in order to maximize revenue, pharmaceutical companies would need to lower their prices for senior citizens. This would result in lower prices for this customer group, meaning that they would pay less for pharmaceutical products than other customer groups. As a result, seniors would likely purchase more pharmaceutical products than they would if prices were higher. Therefore, Choice C - the lowest price for pharmaceutical products - is the best answer.

Suppose That the Price Elasticities of Demand for Pharmaceutical Products