A pharmaceutical company faces a price regulation where it cannot charge any higher than $5,000 for a lifesaving drug.The company knows that the patients put a high value on this product and are willing to pay up to $10,000 for it.The company decides to sell the drug together with periodic blood testing for $10,000.This is an example of

Question

​A pharmaceutical company faces a price regulation where it cannot charge any higher than $5,000 for a lifesaving drug.The company knows that the patients put a high value on this product and are willing to pay up to $10,000 for it.The company decides to sell the drug together with periodic blood testing for $10,000.This is an example of

Quizplus · Accepted Answer

Bundling refers to selling two or more products or services together as a single package. In this scenario, the pharmaceutical company is bundling the drug with periodic blood testing for a total price of $10,000, which allows them to charge the maximum price patients are willing to pay for the drug while complying with the price regulation. This is a legal strategy used by companies to increase profits and offer greater value to customers. Tying occurs when a company makes it mandatory for customers to purchase one product in order to buy another, which is not the case here. Fraud is not applicable as the company is following the regulatory price limit. Therefore, the correct answer is B.

​A Pharmaceutical Company Faces a Price Regulation Where It Cannot

A Pharmaceutical Company Faces a Price Regulation Where It Cannot