Question

2. A few events affect the market for medicines. State whether each of these changes will affect supply or demand, and in what direction. Explain briefly.

a. Due to price inflation of ingredients, medicines are more costly to manufacture. b. A shortage of scientists affects the workforce of pharmaceutical companies.
c. Delocalization in emerging countries allow cheaper production.
d. More severe diseases hit the northern hemisphere this winter.
e. New alternative organic treatments are in trend this year

Answer 1

a. Due to price inflation of ingredients, medicines are more costly to manufacture- This will affect supply, as the higher cost of production will lead to a decreased supply of medicines.

b. A shortage of scientists affects the workforce of pharmaceutical companies- This will affect supply, as the lack of scientists will lead to a decrease in production and a decrease in the availability of medicines.

c. Delocalization in emerging countries allow cheaper production- This will affect supply, as the lower cost of production will lead to an increase in supply of medicines.

d. More severe diseases hit the northern hemisphere this winter- This will affect demand, as the increased need for medicines will lead to an increased demand for them.

e. New alternative organic treatments are in trend this year- This will affect demand, as the increased popularity of organic treatments will lead to an increased demand for them.