Rogers purchased 60 tins of paracetamol at shs. 12,500 each from Abacus Pharma. Two months later the cost of a paracetamol tin increased by 35% and Tom Purchased 25 tins of paracetamol. a) Illustrate the above information on a graph. b) Calculate the price elasticity of demand and interpret your result c) Mention the demand and supply shifters of healthcare services other than price
Rogers purchased 60 tins of paracetamol at shs. 12,500 each from Abacus Pharma. Two months later the cost of a paracetamol tin increased by 35% and Tom Purchased 25 tins of paracetamol. a) Illustrate the above information on a graph. b) Calculate the price elasticity of demand and interpret your result c) Mention the demand and supply shifters of healthcare services other than price
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Rogers purchased 60 tins of paracetamol at shs. 12,500 each from Abacus Pharma. Two months later the cost of a paracetamol tin increased by 35% and Tom Purchased 25 tins of paracetamol.
a) Illustrate the above information on a graph.
b) Calculate the price
c) Mention the demand and supply shifters of healthcare services other than price
Expert Solution
Part a.
In following graph, initial position is at point A where price is P0 (= 12,500) and quantity demanded is Q0 (= 60). When price increases by 35% to P1, following the law of demand, quantity demanded decreases to Q1 (= 25), corresponding to point B.
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