A pharmaceutical company manufactures an arthritis drug that can be prescribed for humans and for dogs. A month's supply of the drug sells for $150 when prescribed for humans and $48 when prescribed for dogs. One can conclude that demand for human consumption is more price elastic than the demand for pet consumption.

Question

Quizplus · Accepted Answer

The difference in price does not directly indicate the price elasticity of demand. Price elasticity of demand is determined by how much the quantity demanded changes in response to a change in price. The price difference could be due to factors other than elasticity, such as production costs, insurance coverage, or market segmentation strategies.

A Pharmaceutical Company Manufactures an Arthritis Drug That Can Be