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From 1980 to 2000, overall expenditures on prescription drugs in Cente
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05 May 2024, 22:56
05 May 2024, 22:56
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Question 1
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From 1980 to 2000, overall expenditures on prescription drugs in Centerville had increased. To curb this increase, the government of Centerville banned pharmaceutical companies from increasing the prices of their drugs. Nonetheless, ten years following the ban, per capita expenditure on prescription drugs in Centerville had increased.
Which of the following, if true, most likely explains why the government’s action did not achieve its desired effect?
A. Citizens aged 65 or older, who are the greatest consumers of prescription drugs in Centerville, accounted for a larger percentage of the population in 2010 than they did in 2000.
B. To offset the potential loss in revenues caused by the ban, pharmaceutical companies decreased their advertising budgets.
C. The population of Centerville increased from 2000 to 2010.
D. During the time period, the government passed laws that loosened restrictions on more affordable generic drugs.
E. Because of the ban, several foreign prescription drug manufacturers limited their advertising in Centerville.
Which of the following, if true, most likely explains why the government’s action did not achieve its desired effect?
A. Citizens aged 65 or older, who are the greatest consumers of prescription drugs in Centerville, accounted for a larger percentage of the population in 2010 than they did in 2000.
B. To offset the potential loss in revenues caused by the ban, pharmaceutical companies decreased their advertising budgets.
C. The population of Centerville increased from 2000 to 2010.
D. During the time period, the government passed laws that loosened restrictions on more affordable generic drugs.
E. Because of the ban, several foreign prescription drug manufacturers limited their advertising in Centerville.
Re: From 1980 to 2000, overall expenditures on prescription drugs in Cente
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06 May 2024, 03:07
06 May 2024, 03:07
Expert Reply
OE
First, identify the situation: The government banned price increases on prescription drugs, but per capita expenditure on prescription drugs went up. The correct choice will provide information that resolves these apparently contradictory facts.
Choice A: If this choice is true, then it can be inferred that, per person, the amount spent on prescription drugs increased. This information thus helps to explain the discrepancy. The correct answer is A.
Choice B: The actions that the pharmaceutical company took to offset losses in revenue are irrelevant to the situation.
Choice C: If the population increased, you would expect per capita expenditures to have decreased, not increased.
Choice D: More affordable generic drugs would more likely lead to a decrease in per capita expenditure, not to an increase.
Choice E: The source of the drugs is irrelevant.
First, identify the situation: The government banned price increases on prescription drugs, but per capita expenditure on prescription drugs went up. The correct choice will provide information that resolves these apparently contradictory facts.
Choice A: If this choice is true, then it can be inferred that, per person, the amount spent on prescription drugs increased. This information thus helps to explain the discrepancy. The correct answer is A.
Choice B: The actions that the pharmaceutical company took to offset losses in revenue are irrelevant to the situation.
Choice C: If the population increased, you would expect per capita expenditures to have decreased, not increased.
Choice D: More affordable generic drugs would more likely lead to a decrease in per capita expenditure, not to an increase.
Choice E: The source of the drugs is irrelevant.
gmatclubot
Re: From 1980 to 2000, overall expenditures on prescription drugs in Cente [#permalink]
06 May 2024, 03:07
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