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For several years, per capita expenditure on prescription [#permalink]
 27 Nov 2006, 06:12
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For several years, per capita expenditure on prescription drugs in Voronia rose by fifteen percent or more annually. In order to curb these dramatic increases, the ministry of health prohibited drug manufacturers from raising any of their products' prices. Even though use of prescription drugs did not expand after this price freeze, per capita expenditure for prescription drugs continued to increase by a substantial percentage each year.
Which of the following, if true, most helps to explain why the ministry's plan did not achieve its goal?
A. After price increases were prohibited, drug manufacturers concentrated on producing new medications to replace existing products.
B. The population of Voronia rose steadily throughout the period.
C. Improvements in manufacturing processes enabled drug manufacturers to maintain high profit levels on drugs despite the price freeze.
D. In addition to imposing a price freeze, the government encouraged the doctors to prescribe generic versions common drugs instead of the more expensive brand-name vendors.
E. After price increases were prohibited, some foreign manufacturers of expensive drugs ceased marketing them in Voronia.
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Director
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Only A works here....
More products were produced, people spent more because there was a bigger choice of products and presumably bought more different products....
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Senior Manager
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^B^
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Director
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A is the answer
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Re: CR: prescription drug - GMATPrep [#permalink]
27 Nov 2006, 08:53
tennis_ball wrote: For several years, per capita expenditure on prescription drugs in Voronia rose by fifteen percent or more annually. In order to curb these dramatic increases, the ministry of health prohibited drug manufacturers from raising any of their products' prices. Even though use of prescription drugs did not expand after this price freeze, per capita expenditure for prescription drugs continued to increase by a substantial percentage each year.
Which of the following, if true, most helps to explain why the ministry's plan did not achieve its goal?
A. After price increases were prohibited, drug manufacturers concentrated on producing new medications to replace existing products.
Drug manufacturers concentrated on producing medicine that is expensive. They did not increase the price of the existing products. They merely replaced them with new ones. Perhaps quantity of intake is also the same as previous medicines. That could be the reason why there is no increase in the overall consumption.
B. The population of Voronia rose steadily throughout the period.
C. Improvements in manufacturing processes enabled drug manufacturers to maintain high profit levels on drugs despite the price freeze.
D. In addition to imposing a price freeze, the government encouraged the doctors to prescribe generic versions common drugs instead of the more expensive brand-name vendors.
E. After price increases were prohibited, some foreign manufacturers of expensive drugs ceased marketing them in Voronia.
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Agree A
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Director
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A !
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OA is A.
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