Pharmaceutical drugs have an inelastic demand, and computers have an elastic demand. Suppose that technological advance doubles

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

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?

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Principles of economics

ISBN: 978-0538453042

6th Edition

Authors: N. Gregory Mankiw

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Question Posted: Dec 14, 2012 06:49 AM

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Pharmaceutical drugs have an inelastic demand, and computers have an elastic demand. Suppose that technological advance doubles

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a As Figure shows the increase in supply reduces the equilibrium ...View the full answer

Principles of economics

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