Suppose that a new drug has been approved to treat a life-threatening disease. The demand for that drug is shown on the graph below. 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. 
A likely reason for the difference in the slopes of the demand curves is that:
A. one market is in equilibrium and the other is not.
B. the over-the-counter pain reliever has many substitutes, but the new drug does not.
C. one drug is heavily regulated by the Food and Drug Administration and the other is not.
D. one drug is new on the market, but the other has been available for a long time.
Answer: B
You might also like to view...
If the government imposes a price floor that is higher than the market clearing price, then
A) consumer surplus will increase while producer surplus will decrease. B) consumer surplus will decrease while producer surplus will increase. C) both consumer surplus and producer surplus will decrease. D) both consumer surplus and producer surplus will increase.
A . What is the income multiplier? b. How will the income multiplier change if the marginal propensity to save increases? Explain
Linda earned an income of $3,000 per month, which has now increased to $3,500 per month. She saves 10 percent and spends the remainder on food, lodging and other expenses. So far, she has managed to save $20,000. What is the change in her saving per month after the increase in income?
What will be an ideal response?
If a person supplies more hours of labor in response to a wage increase, then
A) the substitution effect is greater than the income effect. B) the income effect is greater than the substitution effect. C) the income effect equals the substitution effect. D) the person is not maximizing utility.