Question

Imagine an illness with two cures—drug X and drug Y. Drug X and drug Y are both made by the same firm.

Two events recently happened. First, a study was released showing that drug X is less effective than drug Y. Second, the ingredients used to produce drug X increased in price. What are the consequences of these events?


Choose one:

A. The demand for drug X shifts to the right, and the supply of drug X shifts to the left. The result is a rise in the equilibrium price for drug X and a fall in the equilibrium quantity of drug X.

B. The demand for drug X shifts to the right, and the supply curve for drug X shifts to the left. The result is an unknown change in the equilibrium price for drug X and a fall in the equilibrium quantity of drug X.

C. The demand for drug X shifts to the left, and the supply curve for drug X shifts to the left. The result is an unknown change in the equilibrium price for drug X and a fall in the equilibrium quantity of drug X.

D. The demand for drug X shifts to the left, and the supply curve for drug X shifts to the left. The result is a rise in the equilibrium price for drug X and a fall in the equilibrium quantity of drug X.

Answer 1

Answer:it is a the answer

Explanation:

Answer 2

Option A

Explanation:

Given that Drug X and drug Y are both made by the same firm, with an objective to cure an illness.

Drug X is less effective than drug Y. Hence demand for drug X would decrease as long as Y is available

Also Drug X is more costly with increase in price

So demand curve shifts to the right because of price rise while supply curve shifts to left.

Hence option A is right.