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The News

Read the following blog post:

Market Competition Drives Down Drug Prices

  • Explain what the CPI measures (consumer price index) and how it is calculated.
  • Summarise the reasons for falling pharmaceutical prices.

The theory

This piece of news considers pricing and related issues. For information on related theoretical topics, follow the links below.

What is meant by price?

Different pricing policies



  1. Define the following terms:
    1. skimming pricing
    2. penetration pricing.
  2. Explain the market conditions which will allow a market skimming pricing.
  3. Examine the process of setting a price for a new 'me-too' product entering an established market.

Suggested answers