Macroeconomic Variables - Economic Analysis Module 7...

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Economic Analysis Module 7 – Macroeconomic Variables Lisa M Iodice MBA-502; Dr. Darko
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Module 7 – Macroeconomic Variables Lisa M Iodice MBA-502 Company Selection/Product: Pfizer/Viagra While the pharmaceutical industry as a whole is less sensitive to phases of the business cycle than say the automotive industry, it is not totally immune the macroeconomic variables I chose that affect demand and/or supply are unemployment, income and age of population. Unemployment relates on several fronts. If people are unemployed, whether through frictional, structural or cyclical unemployment (Brue, 2014), they not only may not have health insurance or coverage for even regular doctor visits, but even if they are on a state-sponsored health insurance program, they may not have the necessary disposable income necessary to afford medication, especially medication that is not medically necessary, such as Viagra. Further to that, if their unemployment is frictional and they are transitioning to a first or new job, there may be a waiting period before they are eligible for health insurance benefits. This would affect demand for medications for conditions that are non-life threatening. Unemployment also reduces GDP as supply is reduced and efficient resource allocation is not achieved (Simpson, 2011). Another macroeconomic variable is real personal disposable income (Yuen, 2013). This is the amount available to households, after tax obligations are met, for savings and consumption of durable goods, nondurable goods and services. This has an effect on the elasticity of demand. While consumers would pay almost any price for medications to prevent or cure a life-threatening illness or condition, they would be more sensitive to price differences for life-enhancing medications that may have little difference
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  • Spring '14
  • Unemployment, Lisa M Iodice, personal disposable income

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