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Scenario:

Pharmaceutical drugs have the inelastic demand, and computers have the elastic demand. Assume that technological advance doubles the supply of both products (i.e., the quantity supplied at each price is double what it was).

Required:

problem 1: What takes place to the equilibrium price and quantity in each market?

problem 2: Which product experiences the larger change in price?

problem 3: Which product experiences the larger change in quantity?

problem 4: What takes place to total consumer spending on each product?

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M910568

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