Suppose That Luna's Patent on a Drug Has Expired and Generic

question 13

Multiple Choice

Suppose that Luna's patent on a drug has expired and generic manufacturers now produce cheaper versions. The demand has become more price elastic. How should Luna adjust the price?

• A) Reduce the price.
• B) Increase the price.
• C) Reduce the price according to the new marginal revenue and marginal cost.
• D) Increase the price according to the new marginal revenue and marginal cost.

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Definitions:

Reward

A benefit, often in the form of compensation, recognition, or appreciation, given to individuals for their performance or achievements.

Intermittent Reinforcement

A conditioning schedule in which rewards or punishments are given out at irregular intervals, making a behavior more resistant to extinction.

Continuous Reinforcement

A strategy in behavioral psychology involving the delivery of a reward after every desired action, intending to establish or strengthen behaviors.

Desired Behaviour

Actions or conduct that are preferred or sought after in a particular context or environment.