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For several years, per capita expenditure on prescription

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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 18 May 2011, 02:30
A takes into consideration that prices are more for the new products.
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 18 May 2011, 03:25
very tough one , will go for A
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 21 May 2011, 11:14
barakhaiev wrote:
Quite a challenging question.

I picked initially D, but when saw the OA was very confused.

good reasoning is provided by MGMAT staff here:

http://www.manhattangmat.com/forums/for ... t2413.html


I also pick D........thanks for providing the useful link :)

tough question, anyway
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 22 May 2011, 14:46
gmat1011 wrote:
sly:)... they found the loophole.

Law says: you can't increase the price.

Businessman: ok. I will manufacture a new product (with slight changes) and put it in the market and charge a high price to begin with - then the price ceiling can't stop me from charging the price I want.


Spot on with your reasoning gmat1011

The law said manufacturers can't increase the prices, but it didnt put any restriction on introducing new products with higher prices.
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 22 May 2011, 15:29
A It is... GMAT doesnt always give the best answer choice, One has to pick best out of 5...
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 15 Jun 2011, 19:03
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@Onell: Here is the explanation.

The question says
"Which of the following, if true, most helps to explain why the ministry’s action did not achieve its goal?"

Think like a detective here:
The point is that there is a price freeze. Use of the drugs is not increasing either (more medicine is not being sold). Then why the heck is per capita expenditure increasing? What information would help you make sense of the situation?
If you come to know that manufacturers are introducing newer products to replace the existing ones, could that provide a possible explanation (notice the use of "could" not "will")? Yes, it could.. It does explain if the newer medication is introduced at higher prices. So it COULD help...

Can any of the other options help? No.
E doesn't help. All E says is that some expensive foreign medication is not marketed here anymore. People could be using domestic cheaper products in place of the foreign ones or they could get their medication from neighboring countries which could be cheap (per capita expenditure comes down) or expensive (per capita expenditure stays as before since foreign products were also expensive). It doesn't explain why the per capita expenditure increases.
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 22 Jun 2011, 03:49
good question
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 22 Jun 2011, 06:48
A 1+
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 23 Jun 2011, 11:10
Terrific question!!...Took a while to figure it out...but went with E --- of course A makes perfect sense..

Takeaway: Got to think outside the box sometimes....and use one's imagination to crack questions! Just following a single strategy or approach is just not going to "cut it"!
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 26 Sep 2011, 03:38
getmba wrote:
I would go with A.

Although manufacturers did not increase price of their existing products, but they replaced existing ones with new medications, which cost more. Even though there is no expansion in use of prescription drugs, still per capita expenditure for prescription drugs continued to increase by a substantial percentage each year.

In D, if doctor’s prescribe generic drugs which are cheaper than expensive brand-names then how would it justify the increase in per capita expenditure for prescription drugs. It will in fact decrease per capita expenditure for prescription drugs.


Where does it say that the new drugs costs more. It might cost less too. How can we assume that it costs more?? I am not convinced.
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 26 Sep 2011, 06:41
cialit0506 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 action 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 enable drug manufacturers to maintain high profit levels on drugs despite the price freeze.
D. In addition to imposing a price freeze, the government encouraged doctors to prescribe generic versions of common drugs instead of the more expensive brand-name versions
E. After price increases were prohibited, some foreign manufacturers of expensive drugs ceased marketing them in Voronia.

I cannot get my head round the reasonings of the OA. No matter how I look at it, D seems the best answer. If D is true, wouldn’t per capita expenditure of drugs increase?


OA should be A
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 10 Nov 2011, 05:29
nice question. :)
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 13 Nov 2011, 09:33
I chose A, new drug will help the manufacture reset the price become more higher. Prohibition on old is ineffective.
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 15 Nov 2011, 13:58
I choose A, even though not ideal, I feel the other ones are out of scope.
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For several years, per capita expenditure on prescription [#permalink]

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New post 28 Nov 2011, 23:57
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 action 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 enable drug manufacturers to maintain high profit levels on drugs despite the price freeze.

d) In addition to imposing a price freeze, the government encouraged doctors to prescribe generic versions of common drugs instead of the more expensive brand-name versions

e) After price increases were prohibited, some foreign manufacturers of expensive drugs ceased marketing them in Voronia.





OA is a. The reasoning for the answer a is that new medication is usually more expensive than existing products ?
Also, e is out od scope?
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Re: expenditure on prescription [#permalink]

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New post 29 Nov 2011, 15:07
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A is the only scenario out of proposed that could explain the paradox. New medicine does not have to be more expensive but it definitely can. Once new medicine is produced the manufacturer is not limited by new legislation to set the price to any value, even much greater than all current prices because it would not be considered price increase so it would not violate the new law. So if manufacturer replaces existing medicine with new more expensive one then he complies with the new law and the expenditures on medicine will indeed increase.
E - out of scope because nothing is said about what type(foreign or local) of manufacturers must freeze the prices so it must be inferred that everyone must freeze.Therefore no reason that people would buy more expensive drugs if they have not bought before.
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Re: expenditure on prescription [#permalink]

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New post 12 Dec 2011, 22:16
e) After price increases were prohibited, some foreign manufacturers of expensive drugs ceased marketing them in Voronia.=> the boldface only explains the usage of drug stop, but does not explain why per capital expenditure on drugs increase.
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New post 01 Jan 2012, 22:45
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I chose B,but explanations are good and now A makes sense.
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 13 Jan 2012, 21:51
cialit0506 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 action 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 enable drug manufacturers to maintain high profit levels on drugs despite the price freeze.
D. In addition to imposing a price freeze, the government encouraged doctors to prescribe generic versions of common drugs instead of the more expensive brand-name versions
E. After price increases were prohibited, some foreign manufacturers of expensive drugs ceased marketing them in Voronia.

I cannot get my head round the reasonings of the OA. No matter how I look at it, D seems the best answer. If D is true, wouldn’t per capita expenditure of drugs increase?


If D were to be true, govt plan should have succeeded because generic drugs are very cheap compared to company specific patented drugs (until those patents expire).

As per the argument, govt told manufacturers NOT TO INCREASE prices further and it will be applicable only for existing products. As, govt put a restriction on the price of NEW products, companies found making new products is the way to gain profits.
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Re: For several years, per capita expenditure on prescription [#permalink]

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New post 14 Jan 2012, 09:58
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gmat1011 wrote:
sly:)... they found the loophole.

Law says: you can't increase the price.

Businessman: ok. I will manufacture a new product (with slight changes) and put it in the market and charge a high price to begin with - then the price ceiling can't stop me from charging the price I want.



+1.

This is a relatively easy question, mainly due to the other answer choices sort of "suck" for lack of a better word.

We are desperately searching for why? Why is per capita spending still increasing? Whyyyyy?

A. New product doesn't mean price increase. An increase inherently means something exists, then increases. A new product can be set at any price. So, hypothetically, we could have the same number of people, now purchasing new and more expensive products. Hence, per capita spending is still increasing. These basta*** are getting rid of the old products and then creating replacements that are more expensive. Ding Ding Ding - sounds pretty logical, boys and girls...but let's move on.

B. B states population rose, but the stimulus mentions that usage didn't increase. So, who cares and I am still confused.

C. Whoop de doo for these businesses. We are trying to find out why per capita expenditure on these drugs are increasing, even though the usage isn't increasing, nor is the price of the current drugs. But, I will entertain this bull****. Let's assume the costs of the businesses went down from these new manufacturing processes. Terrific. So, these businesses' profits increase! Yay, P = R - C. Yay MBA stuff. So, presumably, we have lower costs, higher profits, but same price. So, uhhhh, why did the spending per capita increase? And why do I care about businesses' profits? I don't. C = irrelevant - leave me alone.

D. This furthers the confusion. So, usage doesn't go up - per the stimulus. And apparently, drugs are now cheaper. However, per capita spending is still increasing. WHAT IS THIS MADNESS?!?!

E. Well isn't this terrific. This answer choice causes me to waste 10 seconds of my test-taking life. Stimulus states: usage doesn't increase. Stimulus also states prices of current drugs do not increase. This answer choice is weak on several levels. What if these foreign manufacturers of drugs NEVER actually sold any of their drugs? Meaning, if they stopped marketing, who gives a sh**? Their products were never purchased in the first place, in other words, their products never had ANY affect on per capita spending! Laugh at this answer choice, roll your eyes, select A and mock the GMAT gods for trying to fool you.

Not. This. Time.

This is a great example of active vs. passive reading. Whenever you read a stimulus, try and attack its holes - rather than read, and hope an answer choice will make sense. I rarely read the question stem prior to the stimulus, yet again, I was an LSATter. It is a waste of time to read something twice ;). I feel if you attack CR with an active mind, you will perform beautifully. And, have fun with it!

HTH
Re: For several years, per capita expenditure on prescription   [#permalink] 14 Jan 2012, 09:58

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