Pharmaceutical drug have an inelastic demand, and computers have an elastic demand. Assume technological advances lead to the doubling of supply of both products.

a. What happens to the equilibrium price and quantity in each market?
b. Which product experiences a larger change in price?
c. Which product experiences a larger change in quantity?
d. What happens to total consumer spending on each product?

Question

Pharmaceutical drug have an inelastic demand, and computers have an elastic demand. Assume technological advances lead to the doubling of supply of both products.
​
a. What happens to the equilibrium price and quantity in each market?
b. Which product experiences a larger change in price?
c. Which product experiences a larger change in quantity?
d. What happens to total consumer spending on each product?
​

Quizplus · Accepted Answer

The Answer of Pharmaceutical drug have an inelastic demand, and computers have an elastic demand. Assume technological advances lead to the doubling of supply of both products.
​
a. What happens to the equilibrium price and quantity in each market?
b. Which product experiences a larger change in price?
c. Which product experiences a larger change in quantity?
d. What happens to total consumer spending on each product?
​

Pharmaceutical Drug Have an Inelastic Demand, and Computers Have an Elastic