To maximize profit GlaxoSmithKline sets a higher price for Combivir in Europe than in Africa because demand curve in Africa is:
A) lower and more inelastic.
B) lower and more elastic.
C) higher and more inelastic.
D) higher and more elastic.

Question

Quizplus · Accepted Answer

The company sets a higher price for Combivir in Europe than in Africa because demand in Africa is lower and more elastic. This means that consumers in Africa are more sensitive to changes in price and will be less likely to purchase the product at a high price, therefore the company sets a lower price to increase demand and maximize profits. In contrast, demand in Europe is higher and more inelastic, meaning consumers are less sensitive to price changes and will likely still purchase the product even at a higher price, allowing the company to set a higher price and still maximize profits.

To Maximize Profit GlaxoSmithKline Sets a Higher Price for Combivir