Suppose that a new drug has been approved to treat a life-threatening disease. The demand for that drug is shown on the accompanying graph. Prior to approval of this drug, the only treatment for this condition was any one of several non-prescription, or over-the-counter, pain relievers. The demand for one brand of the several non-prescription pain relievers is also shown on the graph. Demand for the new drug is ________ while demand for one brand of the over-the-counter pain relievers is ________.
A)the line labeled A; the line labeled B
B)the line labeled B; the line labeled A
C)the horizontal line at $60; the line labeled B
D)the vertical line at 100; the line labeled A

Question

Suppose that a new drug has been approved to treat a life-threatening disease. The demand for that drug is shown on the accompanying graph. Prior to approval of this drug, the only treatment for this condition was any one of several non-prescription, or over-the-counter, pain relievers. The demand for one brand of the several non-prescription pain relievers is also shown on the graph.  Demand for the new drug is ________ while demand for one brand of the over-the-counter pain relievers is ________.
A)the line labeled A; the line labeled B 
B)the line labeled B; the line labeled A 
C)the horizontal line at $60; the line labeled B 
D)the vertical line at 100; the line labeled A

Quizplus · Accepted Answer

While there is no substitute for the new drug, there are a number of substitutes for one of the over-the-counter pain relievers, so the demand curve for the over-the-counter pain reliever will be flatter (more elastic).

Suppose That a New Drug Has Been Approved to Treat