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. At a price of $15 (the price at which the two demand curves intersect), the price elasticity of demand for the new drug is ________ the price elasticity of demand for the over-the-counter pain reliever.
A)greater than
B)less than
C)the same as
D)the reciprocal of

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.  At a price of $15 (the price at which the two demand curves intersect), the price elasticity of demand for the new drug is ________ the price elasticity of demand for the over-the-counter pain reliever. 
A)greater than 
B)less than 
C)the same as 
D)the reciprocal of

Quizplus · Accepted Answer

At any given price and quantity, the steeper is the demand curve, the lower is the price elasticity of demand.

Suppose That a New Drug Has Been Approved to Treat