Question: Study the two demand curves below. One is for a drug manufactured by Acme Pharmaceuticals that thousands of people need in order to stay healthy.

Study the two demand curves below. One is for a drug manufactured by Acme Pharmaceuticals that thousands of people need in order to stay healthy. The other is for a particular brand of shampoo. In which case is demand elastic and in which case is it inelastic? Which of these products is Product A and which is Product B? How did you make this determination? Which of these firms has greater monopoly power? In general, do firms with elastic or inelastic demand have more monopoly power?

Price Product A Product B Quantity demanded Price Demand Demand Quantity demanded

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