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# Demand analysis- Managerial Economics

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Demand and supply analysis from the given data- Plot both together on a supply-demand graph : Are these inverted or perverted curves? How can you tell? If not already in inverse form, provide the inverted formulas.

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```									              Sub: Economics                                                      Topic: Managerial Economics

Question:

Demand and supply analysis from the given data- Plot both together on a
supply-demand graph.

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You head the introduction of a new drug, Prilosec OCD. Prilosec OCD is a version of Prilosec OTC
designed for obsessive compulsives with heartburn (exactly 1 pill must be taken every 23
minutes precisely). You estimate that the demand curve is Q=500 -1/2.p. Your cost accountants
estimate that your supply curve is Q=-62.5 + 0.625.p.

a. Are these inverted or perverted curves? How can you tell? If not already in inverse
form, provide the inverted formulas.
b. Plot both together on a supply-demand graph. Calculate the equilibrium P and Q,
and show them on your graph as well. Also calculate CS (consumer surplus) at the
equilibrium.
c. What is the elasticity of demand for POTC at equilibrium? The elasticity of supply
(uses the same formula as for elasticity of demand, but use the slope of the supply
curve)? At this point, if you increased the price slightly, would total revenue increase

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