1. Estimates of the marginal cost of Daraprim are S100 for a 100 pill bottle. If Turing charges $75,000per bottle, what is the elasticity of demand that Turing believed it faced? You need to know that (P-MC)/P = 1/el, where le is the absolute value of the elasticity of demand.2. Estimate a linear demand curve for Daraprim of the form P- mQ + b.

Relationship between price, marginal cost, and the price elasticity of demand. (P - MC) / P = 1 / I…

Answered: 1. Estimates of the marginal cost of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Estimates of the marginal cost of Daraprim are S100 for a 100 pill bottle. If Turing charges $75,000 per bottle, what is the elasticity of demand that Turing believed it faced? You need to know that (P- MC)/P- 1/le, where le is the absolute value of the elasticity of demand.