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ou work for a pharmaceutical company that received a patent on a new drug a few years ago. The sales last year were $150 million and the marginal cost of producing the product is $0.50 per pill. However, your company is still not earning profits from selling this drug, partly because the company spent $1.7 billion on R&D and obtaining FDA approval.

A recent study suggests that at the current price of $1.50 per pill, the own price elasticity of demand for the drug is -2. Based on this information, what can you do to boost profits? Should you raise or lower the price? Explain why, show your calculations

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