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 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 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 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.

getMBA already gave nice explanation for A.

Total drugss sold same.
per capita increased ==> cost of drugs increased
price of old drugs, drugs already existed in the market, not increased

How is that possible? New drugs have the higher prices than older ones reulting in per-capita expense on drugs to increase.

A it is

This was an easy one but others are really hard.
CR is the most difficult in verbal
i get only 40% correct answers.

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.

+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

Is this a Weaken or resolve the paradox question?

It seems to me that it is a resolve since we have two contradicting sets of facts. But what makes this a possibility for a weaken question is that it has a conclusion.

Any help to explain what question type this is?

Assume, there were 100 different types of medicines available in the market on which govt. froze the prices(that a particular drug will cost $X, and no chemist or druggist can charge more than the fixed price on the drug).It is also mentioned that the consumption of drugs stayed constant.Then how can the per capita expenditure for prescription drugs continued to increase by a substantial percentage each year?

May possible that the drug manufacturers started making more variety of drugs.(The listed drugs were 100 now 150; 50 new varieties are in market , and govt is unaware of those 5o drugs but the chemists are charging more and more for those new medicines.)hence per capita expenditure for prescription drugs continued to increase by a substantial percentage each year.

A. After price increases were prohibited, drug manufacturers concentrated on producing new medications to replace existing products ----- This is one way commercial corporations can survive and keep their profits steady. Since new drugs do not suffer price control. Drug manufactures make merry and hay while the sun shines. That is the reason govt. controls most of the times bite the dust


B. The population of Voronia rose steadily throughout the period. ---- Per capita takes into account of the fluctuations and then evens out.

C. Improvements in manufacturing processes enable drug manufacturers to maintain high profit levels on drugs despite the price freeze. ----improvements are not part of the agenda in this topic. We naturally believe that all the possible improvements are already in place. No company will keep improvements at bay, waiting for the price controls to arrive. Using generic versions, should bring down the cost and help reduce per capita prescription drugs figure.

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 – The discussion is about expenditure of branded prescription products This is also antithetical, since any use of generic versions, should then help bring down the per capita figure rather than raise

E. After price increases were prohibited, some foreign manufacturers of expensive drugs ceased marketing them in Voronia. availability of expensive or inexpensive drugs do not decide the per capita figure. It is the usage. Hence not relevant.

_________________

But how is it implied that new drugs will be costlier as compared to the old one?
Please explain.
Thanks

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