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You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales (50 million last year) and a low marginal cost of producing the product ( 0.50 per pill), your company has yet to show a profit from selling the drug. This is, in part, due to the fact that the company spent 1.7 billion developing the drug and obtaining FDA approval. An economist has estimated that, at the current price of 1.50 per pill, the own price elasticity of
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