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GMATPrep - Voronia

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by jsl » Sun Nov 02, 2008 11:11 am
OA is A.

What I don't understand is... the passage says the product's prices can't be raised and the usage of prescription drugs did not expand. Although new medications were produced, how can the spending increase if the same number of prescription drugs were used?
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Re: GMATPrep - Voronia

by yezz » Sun Nov 02, 2008 12:37 pm
Per capita expenditure = total expenditure / population

these are the only 2 factors that matters

by illimination

2)......population increase thus according to the above formula per capita will decrease.........wrong
the rest of the answer choices has no effect on the above formula

then A is the best answer ( only the best answer not the most logical)
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by rohangupta83 » Sun Nov 02, 2008 5:38 pm
choice A says that new medicines are replacing old ones. So, the price of the new medicines could be more than the ones they are replacing.

That's the only way for the per capita expenditure to rise besides population dropping and expenditure keeping steady.
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by nervesofsteel » Mon Nov 03, 2008 1:47 pm
yes A should be the answer

as by replacing old prescribed drugs with new costly drugs a manufacturer can avoid raising prices and the expenditure will increase simultaneously
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by adilka » Mon Dec 22, 2008 11:37 pm
Im going to bring this topic back from the dead.
I disagree with A because the question itself says:
"prohibited manufacturers from raising ANY of their product's fees"
Key word being ANY. To me, that means old and new. I understand that you'll say "new drug" prices weren't even set in the first place, which will eliminate the concept of "raising" prices. But I would assume that Voronian government means prohibiting price increase for drugs for a certain disease, not necessarily list them all by name. Otherwise the government is just stupid - companies can change the drug a little, call it something else and increase the price!

I personally picked C as the one most "suitable" since I thought higher margins mean lower worker wages, hence per capita expenditure would rise (drug costs are flat, wages DECLINING, hence, % spent on drugs increasing).

Am I thinking way too much into these problems?? :oops:
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by iwg770 » Tue Dec 23, 2008 2:52 am
A is proper.

prohibited manufacturers from raising ANY of their product's fees.

How can you increase the fee of a new product?
New product is New so it is launched first and then it fee can be increased. So if drug company decides the fee of its new product cosiderably high than existing fee, then expenditure will increase. Also, technicaly Drug company is not voilating the law as it is not increasing the fees, it is just introducing the new product.
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by adilka » Tue Dec 23, 2008 8:18 am
iwg770 wrote:A is proper.

prohibited manufacturers from raising ANY of their product's fees.

How can you increase the fee of a new product?
New product is New so it is launched first and then it fee can be increased. So if drug company decides the fee of its new product cosiderably high than existing fee, then expenditure will increase. Also, technicaly Drug company is not voilating the law as it is not increasing the fees, it is just introducing the new product.
That's why I said:
I understand that you'll say "new drug" prices weren't even set in the first place, which will eliminate the concept of "raising" prices. But I would assume that Voronian government means prohibiting price increase for drugs for a certain disease, not necessarily list them all by name. Otherwise the government is just stupid - companies can change the drug a little, call it something else and increase the price!
Anyway, not sure how much value there is to discussing this. It is what it is
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by samanthaJ79 » Fri May 13, 2016 3:17 am
A looks good for me
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