Feelgood Pharma is the first company to get approvals from the US, Japan, Germany

and France for a vaccine to stop the spread of COVID-19. The good news is that the

marginal cost of producing each dose is $25 and that one dose is all that is needed to

provide lifetime protection. Market research indicates that the elasticity of demand in

the USA is -2. The bad news is that everyone has to pay for the vaccine themselves.

a) What price should Feelgood Pharma charge in the USA?

b) In India and Mexico, the elasticity of vaccine demand is estimated to be -5.

Explain how this is likely to affect your pricing decisions in those countries.

Would you charge the same price in both?

c) The federal government offers you $30 a dose to meet the needs of persons with

low incomes who do not have health insurance. You would sell the vaccine to

the feds and they would distribute it free through local clinics. How should you

respond to this offer?