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VetPharm has historically produced and sold drugs for animals; however, one of its products developed for animal use has recently been approved for a similar use in humans. Market research has revealed that that at the current per dose price, the elasticity of demand on the part of animal owners is -2.0. The research also estimates that at this price the elasticity of demand for human use would be -.2. The current price is $5.00 per dose. If the MC of production is $1, what should the company do?
a. reduce animal price; reduce human price.
b. raise animal price; raise human price.
c. reduce animal price; raise human price.
d. raise animal price; reduce human price.
Suppose you are analyzing market for minivans. What will be the impact on the equilibrium price and quantity of each of the following events on the minivan market?
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